Current/ Expected Orderbook/ Pending Orders?

The order book stood at $194.8 million for the current quarter (Q2 FY24), including spillover from the previous quarter and certain renewals closed earlier in this quarter. The order book reflects a 1.3x book-to-bill ratio, indicating strong deal wins. There has been some spillover of deals from Q1 into Q2 and a couple of deals expected in Q3 were signed earlier in Q2. Management expects the normalized run rate to be close to or better than the last quarter. The entire $194.8 million order book is expected to convert into revenue, though revenue leakage may occur due to furloughs and f

Any current/future capex/capital investment/strategic investment?

The company is focused on reinvesting margins back into the business to build capabilities, particularly in sales and leadership, with impact expected in Q3 and Q4 FY24. There is ongoing investment in capability building across technology areas such as Advanced Engineering, cloud-native capabilities, Experience Services, Oracle, SAP, and Salesforce. Investments are also planned to be calibrated to be ready for growth when the industry environment improves. No specific details on large capex or strategic investments are provided, but any margin over and above the 14-16% range is earmarked for r

Future growth expectations in sales/revenue/volumes?

The company aims to move up one performance quadrant every year, targeting top-quadrant status over a multi-year horizon. (Manish Tandon, Page 15) Sales headcount is considered adequate currently, but quality of sales performance is continuously monitored with counseling for underperformers. (Page 15) Order book stands strong at $194.8 million, indicating healthy deal wins and a strong sales pipeline. (Page 7) Growth driven mainly by farming existing clients and adding net new logos; non-top 20 clients are growing faster than top 20 clients. (Page 11) Healthcare vertical is seeing focused

Future growth expectations in earnings/operating earnings/profits/EPS?

Zensar aims for steady growth by moving up one performance quadrant per year, currently at the bottom quadrant. Q2 FY24 showed sequential PAT growth of 130 basis points and YoY growth of 940 basis points. Earnings per share grew 11.3% quarter-on-quarter in Q2 FY24. The management targets maintaining EBITDA margins within a mid-teens range (14-16%), reinvesting any excess back into capabilities and growth. Margin guidance is conservative, considering known challenges like furloughs and wage hikes. Investment in sales and leadership is ongoing, expected to positively impact revenue in upcoming q

Zensar Technologies LtdQ2 FY24IT - Software

Zensar Technologies Ltd Q2 FY24 Earnings Call Analysis

Revenue, margin, capex, fundraise and order book outlook from management commentary.

Price: ₹429P/E: 12.4Market Cap: ₹9.9K CrSector: IT - Software

Management growth scorecard

Revenue

Category 4

Margin

Category 3

Fundraise

N/A

Order

Yes

Capex

Yes

2 of 4 growth signals are positive.

Full analysis

Revenue guidance

Category 4

The company aims to move up one performance quadrant every year, targeting top-quadrant status over a multi-year horizon. (Manish Tandon, Page 15)
Sales headcount is considered adequate currently, but quality of sales performance is continuously monitored with counseling for underperformers. (Page 15)
Order book stands strong at $194.8 million, indicating healthy deal wins and a strong sales pipeline. (Page 7)
Growth driven mainly by farming existing clients and adding net new logos; non-top 20 clients are growing faster than top 20 clients. (Page 11)
Healthcare vertical is seeing focused leadership and is expected to add growth opportunities. (Pages 7, 11)
Large deals (>$5 million ACV) are in the pipeline but expected to be margin dilutive initially; company is preparing to invest for such deal wins. (Page 12, 15)
Potential headwinds in Hitech vertical due to industry conditions may delay growth in that segment. (Page 7, 14)
Overall, company expects continued sales acceleration, balanced by macroeconomic challenges and furlough impacts, with focus on long-term growth. (Pages 6, 14, 15)

Margin guidance

Category 3

Zensar aims for steady growth by moving up one performance quadrant per year, currently at the bottom quadrant.
Q2 FY24 showed sequential PAT growth of 130 basis points and YoY growth of 940 basis points.
Earnings per share grew 11.3% quarter-on-quarter in Q2 FY24.
The management targets maintaining EBITDA margins within a mid-teens range (14-16%), reinvesting any excess back into capabilities and growth.
Margin guidance is conservative, considering known challenges like furloughs and wage hikes.
Investment in sales and leadership is ongoing, expected to positively impact revenue in upcoming quarters (Q3 and Q4).
Order book of $194.8 million suggests healthy revenue conversion but subject to potential revenue leakage due to furloughs and fewer working days.
Long-term growth is tied to client mining, expanding beyond top clients, and building capabilities in emerging sectors like Healthcare & Life Sciences.

See what Zensar Technologies Ltd management said on margin guidance — free account, 30 seconds.

Fundraise plans

The provided transcript from the Zensar Technologies Limited Q2 FY24 Earnings Call does not mention any current or planned future fundraising through debt or equity. Key points related to finances include: - Cash and cash equivalents stood at $227.1 million as of September 30, 2023. - There was a $6.7 million decrease in cash due to advanced tax payments, dividend payouts, and annual bonus payouts. - Total outstanding hedges amounted to $289.1 million. - No discussion or indication of raising funds via debt or equity during the call. - The company focused on maintaining margins at mid-teens despite demand softness. - Investments are being made internally through operational improvements, capability building, and sales force enhancement without mention of external fundraising. In summary, no information regarding new fundraising rounds through debt or equity was disclosed.

Order book

Yes

The order book stood at $194.8 million for the current quarter (Q2 FY24), including spillover from the previous quarter and certain renewals closed earlier in this quarter.
The order book reflects a 1.3x book-to-bill ratio, indicating strong deal wins.
There has been some spillover of deals from Q1 into Q2 and a couple of deals expected in Q3 were signed earlier in Q2.
Management expects the normalized run rate to be close to or better than the last quarter.
The entire $194.8 million order book is expected to convert into revenue, though revenue leakage may occur due to furloughs and fewer working days.
There are ongoing efforts for large deals (around $5 million ACV or $25 million TCV), with 4-5 large deals in the pipeline, although no projections on wins have been made yet.

See what Zensar Technologies Ltd management said on order book — free account, 30 seconds.

Capex plans

Yes

The company is focused on reinvesting margins back into the business to build capabilities, particularly in sales and leadership, with impact expected in Q3 and Q4 FY24.
There is ongoing investment in capability building across technology areas such as Advanced Engineering, cloud-native capabilities, Experience Services, Oracle, SAP, and Salesforce.
Investments are also planned to be calibrated to be ready for growth when the industry environment improves.
No specific details on large capex or strategic investments are provided, but any margin over and above the 14-16% range is earmarked for reinvestment in the business.
Investments are balanced with managing margins to stay within mid-teens range while supporting sales and capability building efforts.
Investments include building sales force and leadership, with recent onboarding of Healthcare vertical leadership as part of domain expansion.
The company is prepared to invest further if large deals are won, though such deals initially may not be margin accretive.

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