01 — Opening Hook
The Profitable Paradox: How Zensar Proved Size Isn’t Everything
Picture this: A mid-cap IT services company walks into earnings, revenue flatlines at 1.3% growth, and investors expect bloodshed. Instead, the CFO announces 18.2% profit growth, the CEO boasts about maximizing shareholder value over revenue obsession, and management genuinely doesn’t care if TMT vertical—their largest historical drain—never recovers. Then they announce a dividend payout hike and laugh at analysts asking for growth targets.
Welcome to Zensar Q3 FY26. This is either brilliance masquerading as pragmatism or a master class in managing investor expectations so low that delivering profits instead of revenue feels like a magic trick. Read on. Because the way Manish Tandon (CEO) answered growth questions on this call was refreshingly brutal, or dangerously delusional. Probably both.
Fair warning: This company prioritizes profit growth over revenue growth. Some investors love it. Some think the CEO is playing games with semantics. We decode both sides.
02 — At a Glance
The Numbers Played
- Revenue: $160.5M+1.3% YoY (constant currency)
- Sequential Growth:-1.3% QoQ (furloughs to blame)
- Gross Profit:33.7%, +270 bps sequentially (forex + offshore mix)
- EBITDA Margin:17.4%, +200 bps QoQ. Structural + seasonal boost.
- Net Profit Growth:+18.2% YoY in $ terms, +25% in ₹
- PAT:13.9% (includes ₹25 Cr labour code headwind)
- Order Book:$180.2M, +13.6% QoQ, Book-to-Bill 1.12x
- Cash Position:$322.4M, +$29.4M sequentially. DSO: 71 days (pristine)
- Attrition:9.5%. Fourth successive quarter below 10%.
- EPS (Diluted):₹8.7, +9.4% QoQ. Interim dividend: ₹2.4/share (120% of face value)
The Twist: Revenue flatlines. Profit explodes. CEO says this was strategic. Analysts are confused. Very confused.
03 — Management’s Key Commentary
What They Said. The Spin. The Truth.
Manish Tandon (CEO): “We begin 2026 with a singular commitment to lead as a truly AI-native technology services company. Nearly 60% of our workforce is AI certified and 20% of this year’s order book is AI influenced.”
😏 Translation: We trained everyone on Coursera. 20% of orders have AI mentioned somewhere. Peers claim 40-60%. We’re disciplined; they’re fantasizing.
Manish Tandon: “While revenue growth is very exciting for everyone, I’m a bit old school. I still focus on the bottom line. We have grown year-over-year in dollar terms; we have shown 18.2% growth in bottom line.”
🎭 Translation: Stop asking for revenue growth. Growth is a vanity metric. Profit is where real shareholder value lives. And we’re crushing it.
Manish Tandon (on TMT vertical collapse): “I mean, let’s get beyond it now. There is no point in saying TMT, TMT, TMT… We are seeing a lot of spend moving away from services to AI, capital investment towards AI.”
💣 Translation: TMT is dead. Clients are buying hardware, not services. We’ve moved on. Stop beating a dead horse. We will deliver double-digit profit growth despite TMT not delivering.
Pulkit Bhandari (CFO): “Our endeavour is to invest continuously in AI and sales. Some of the expansion will go back and get flowed back in these two areas. The long-term guidance still stays at mid-teens.”
📊 Translation: We’re margin-positive at 17.4%, mid-teen guidance gives us room to invest and still look good. We’re not surrendering gains—we’re deploying them strategically.
Vijayasimha (COO): “Volume growth was 1.7% overall, 3.1% offshore. There was a decline at on-site because of movement from on-site to offshore.”
📈 Translation: Revenue math is broken by currency. But on the ground, we’re moving work where margins are fat. That’s the real story.
Manish Tandon (on growth target questions): “How much revenue growth do you want? Tell me. Maybe I can also buy revenue. So I mean, look at the overall picture. Ultimately my job is to deliver shareholder value.”
🔥 Translation: I’m not chasing unprofitable revenue. You want me to buy $10M of revenue at negative margins? No thanks. Shareholder value = profit growth + EPS growth.
04 — Numbers Decoded
The Financial Reality Check
