Zensar Tech. Q1 FY27 Results (NSE: ZENSARTECH)
Signal: Steady quarter
The read
Consolidated revenue growth of 8.9% YoY is a deceleration from the ~10% in Q4FY26, and operating margins were flat YoY at 16.3% — the fourth consecutive quarter of flat/contracting margins. PAT growth was a tepid 1.0% YoY, weighed by higher depreciation and sequential other-income drop. Cloud Infrastructure & Security is the sole profit-growth driver.
| Metric | Value | YoY | QoQ |
|---|---|---|---|
| Revenue | ₹1,508.3 Cr | 8.9% | 4.0% |
| EBIT | ₹246.2 Cr | 2.3% | |
| Net profit | ₹183.8 Cr | 1.0% | |
| EPS | ₹8.11 | 1.2% | |
| EBIT margin | 16.3% |
P&L walk
Revenue grew 8.9% YoY but Employee cost rose slightly as % of revenue (+40bps), while Subcontracting costs dropped 130bps, broadly offsetting. Depreciation jumped 23.4% YoY, pressuring profitability. Segment profit from Cloud Infrastructure & Security rose 19.2% YoY, while Digital & Application Services fell 5.2% YoY. OPM held at 16.3% (flat YoY) due to a mix of cost control and margin drag from the larger Digital segment.
Segments
Cloud Infrastructure & Security segment revenue grew 16.8% YoY and segment profit rose 19.2% YoY, outperforming the larger Digital & Application Services segment which saw revenue growth of 6.8% but segment profit declined 5.2% YoY — the profit growth was entirely from the Cloud segment.
Key positives
- Cloud Infrastructure & Security segment revenue grew 16.8% YoY, a continued strong growth trajectory.
- Subcontracting costs as % of revenue fell 130bps YoY, indicating improved in-house delivery mix.
- Operating margin (OPM) remained stable at 16.3% despite higher employee cost and depreciation.
Key concerns
- PAT growth of only 1.0% YoY significantly lagged revenue growth of 8.9% YoY, due to a jump in depreciation (+23.4% YoY) and flat other income.
- Digital & Application Services segment profit declined 5.2% YoY despite revenue growth of 6.8% — margin compression in the core segment.
- Depreciation grew 23.4% YoY, far outpacing revenue growth, suggesting elevated capex coming into P&L without proportionate revenue expansion.
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