Are Zensar Tech. latest results good or bad?

Zensar Technologies has reported its financial results for the quarter ended September 2025, showcasing a blend of growth in revenue and net profit, alongside challenges related to margin pressures. The company achieved net sales of ₹1,421.30 crores, reflecting an 8.66% year-on-year growth compared to the same quarter last year. This marks a continuation of its revenue growth trajectory, with the latest quarter representing the eighth consecutive quarter of sequential revenue growth.
Net profit for the quarter stood at ₹182.20 crores, which indicates a significant year-on-year increase of 17.02%. This improvement in profitability is notable, especially in the context of the previous year's performance, which saw a decline. However, despite the positive revenue and profit figures, Zensar's operating margin, which was reported at 15.48%, has remained relatively flat, raising concerns about the sustainability of profitability in light of rising employee costs, which now account for a larger percentage of revenue.

The company's operating profit before depreciation, interest, and tax (excluding other income) was ₹220.00 crores, reflecting a modest sequential improvement in operating margin. However, the reliance on other income, which contributed significantly to the profit before tax, highlights potential vulnerabilities in core operational earnings quality.

In terms of operational dynamics, Zensar is facing challenges from employee cost inflation, which has risen to 65.1% of revenue, indicating a need for careful management of workforce productivity and cost control to maintain margins. The return on equity stands at 15.97%, suggesting room for improvement in capital efficiency compared to industry leaders.

Overall, Zensar Technologies has demonstrated consistent revenue growth and a solid balance sheet with zero long-term debt, but it must navigate significant margin pressures and operational challenges. The company has experienced an adjustment in its evaluation, reflecting these mixed operational trends. Investors may want to monitor future performance closely, particularly regarding margin recovery and the impact of rising costs on profitability.