Zensar Tech maintains mid-teens margin guidance, sees some pressure in Hi-Tech vertical

Manish Tandon, MD & CEO of Pune-headquartered Zensar Technologies said the sequential decline in the third quarter revenue was primarily due to seasonality factors and the weaker than anticipated show of the Hi-Tech vertical, which is around 35-40% of the company's exposure.

However, he noted the strong year-on-year growth across sectors. "South Africa for us is up 18% in constant currency. UK, Europe is up 12%. BFSI is up 12%, and MC, which is manufacturing and Consumer Services, is up 7.7%" he added.

Zensar Technologies' third quarter revenues were down 3.3% sequentially impacted by seasonal furloughs. The margin, at around 17.2%, was better than the company's guidance of mid-teens margins, but lower sequentially.

Tandon said the company is confident of maintaining margin in the mid-teens.

He also discussed the potential acquisitions that the company is pursuing as part of its growth strategy. He said the firm is currently in talks with bankers regarding three prospective companies.

"We are sitting on about $250 million of cash. Almost every week, we are looking at companies which can fit with our strategy and come at a price where I can maintain my responsibility to the shareholders and not overpay for this thing," Tandon stated.

Zensar Technologies entered the healthcare sector as a vertical just two quarters ago. Tandon attributed the subdued show of the vertical to the completion of some large projects. However, the company is building up the healthcare team and is poised for growth in the coming quarters, he said.

Zensar stock has gained nearly 150% over the past year. Its current market capitalisation is around ₹12,717 crore.