Zensar Technologies Ltd (NSE: ZENSARTECH) Q4 2025 Earnings Call dated Apr. 25, 2025
Corporate Participants:
Manish Tandon — Chief Executive Officer and Managing Director
Pulkit Bhandari — Chief Financial Officer
Vijayasimha Alilughatta — Chief Operating Officer
Analysts:
Amit Chandra — Analyst
Sandeep Shah — Analyst
Nitin Padmanabhan — Analyst
Shraddha Agrawal — Analyst
Girish Pai — Analyst
Naveen Baid — Analyst
Manik Taneja — Analyst
Unidentified Participant
Presentation:
Operator
Ladies and gentlemen, good day and welcome to Zensar Q4 FY ’25 Conference Call hosted by HDFC Securities. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star 0 on a touchstone phone. Please note that this conference is being recorded.
I now hand the conference over to Mr Amit Chandra from HDFC Securities. Thank you, and over to you, Mr Chandra. Thank you.
Amit Chandra — Analyst
Yeah. Thank you, operator. Thank you. Good evening, everyone. On behalf of HDFC Securities, I welcome you all to the Zensa Technologies quarter-four FY ’25 earnings call. We have with us Mr Manish, CEO and Managing Director; Mr Handari, Chief Financial Officer; and few other members of the senior management team. Before I hand over the call to Manish, I would like to highlight that the safe-harbor statement on the second slide of the earnings presentation is assumed to be read and understood.
Thank you, and over to you, Manish.
Manish Tandon — Chief Executive Officer and Managing Director
Thank you, Amit. Hello, good morning, good afternoon, good evening, everyone. First of all, thank you all for taking the time to join us today to discuss Zensar’s financial results for the 4th-quarter of FY ’25. With me on this call are the CXOs, Pulkit Mandari, CFO; Hima, COO; and Vineet Ranjan, CHRO. I’m pleased to share that Q4 was a solid quarter for us marked by overall growth in all geographies and sustained profitability. While geopolitical uncertainties and cautious client sentiment influenced the broader market, our teams remain agile and committed to our purpose.
Together we shape experiences for better futures. In Q4 FY ’25, the company reported revenues of $156.8 million, a sequential quarter-on-quarter growth of 0.9% in constant-currency. For the full-year FY ’25, the company reported revenues of $624.5 million, nearly growth of 5.4% in reported currency and 5.1% in constant-currency basis. In Q4 FY ’25, our gross margins stood at 30.3%, sequential growth of 20 bps quarter-on-quarter. In constant-currency terms, on a quarter-on-quarter basis, our revenue in telecom, and technology grew by 1.7%. Banking and financial services saw growth of 3.4%. Healthcare, manufacturing and consumer services witnessed a decline of 1.4% and 2.6%, respectively.
In the current dynamic environment, we are partnering with our clients to deliver the best-value for their investments, resulting in healthy traction. Our order book stood at $213.5 million year-over-year growth of 17.6% and this is the 3rd-quarter in a row that our order book has exceeded $200 million. Our differentiated propositions in the AI space across all verticals and service lines have enabled us to capture client mindshare and our AI-led pipeline continues to grow.
The Board of Directors have reduced the dividend policy and considering the financial performance of have decided to materially increase the dividend payout Ratio to 40% to 50% of consolidated profits from 26% to 35% over the past five years. This is subject to overall performance and any strategic initiatives that Zensar may take. In-line with the new policy, the Board of Directors have recommended a final dividend of INR11 per share for FY ’25, subject to approvals of shareholders. This is the total dividend, including the interim dividend for FY ’25 will be INR13, which corresponds to 650% of face value and 45% of consolidated profit-after-tax of FY ’25. With that, I will now invite Pulkit, our Chief Financial Officer, to provide an update on critical financial data. Over to you,.
Pulkit Bhandari — Chief Financial Officer
Thank you, Manish. Good day, everyone. Thank you all for joining this call. I will take you through some of the key business and financial metrics for the quarter-ending March ’25. Revenue for the financial year ’25 stood at $62624.5 million in US dollar terms, reflecting a year-on-year growth of 5.1% in constant-currency terms. Reported revenue for the 4th-quarter of financial year ’25 stood at $156 million, reflecting a growth of 0.9% sequentially in constant-currency terms.
On a Y-o-Y basis, revenue grew by 6.3% in constant-currency terms. We have sustained EBITDA of 15.6% in Q4 FY ’25 on back of cost management and improved utilization, which absorbed the continued impact of furloughs and Q3 FY ’25 benefit of lease utilization. Our PAT for the quarter stood at 13%. Some of the other key highlights are that we added an order book of $213.5 million in this quarter. One of our key customers moved into $20 million bucket due to deeper farming efforts.
Our voluntary attrition stood at 9.9%, which has been lowest in recent years. Consistently adding headcount throughout the year, 353 net headcount added in FY ’25. BFI — BFSI continues to grow as a result of strong farming and hunting efforts, announced strategic partnership with Tesco. On ESG front, we continue to retain our water positive status in FY ’25 and 100% Hazardous and non-Hazardous waste is diverted from disposals, in-line with our global renewable energy gold share of 50% — 50% by end of FY ’25, we have achieved 56.9%. We have currently invested in — invested in additional renewable energy sources in Pune campus and augmented the existing rooftop solar with our solar.
We delivered a balanced performance on an on all operational and financial parameters. Revenue grew along with sustainable margins with a strong focus on verticalization, deepening service line capabilities and investing in AI solutions. We believe Zensar is well-poised to capture upcoming opportunities. And with that, I will now invite Vijay, our Chief Operating Officer, to comment further on Q4 FY ’25 results.
Vijayasimha Alilughatta — Chief Operating Officer
Thank you, Manish and Pulkit. Greetings, everyone. I will share details about our operational efficacy, service line performance, annual client experience survey and AI journey. Our utilization increased by 170 basis-points quarter-on-quarter and by 90 basis-points year-on-year. Figure associated with accelerated fulfillment and capability enrichment continued in Q4. We had a gross addition of 873 employees in the quarter and a net addition of 185 people. Our voluntary attrition reduced to 9.9% in Q4, which is a 10 basis-points reduction sequentially and a Y-o-Y reduction of 100 basis-points.
The offerings from our service lines and industry services groups continue to resonate well with our clients. The share of revenues from our service lines increased to 54.6% in Q4, which is 240 basis-points higher Y-o-Y. On Q-o-Q basis, in constant-currency terms, data engineering and analytics grew by 8.6%, cloud infrastructure and security services grew by 1.5%. Application services and enterprise application SaaS grew by 0.3%, experience services dipped by 1.1%, advanced engineering services dipped by 2.8%. The annual client experience survey was conducted in Q4.
Our experience index continues to be in the top-quartile of the industry. We clocked our highest-ever scores on satisfaction, advocacy and business value dimensions. Our four major AI solutions stacks, namely enterprise AI solutions, responsible AI solutions, enterprise cognitive hyper automation solutions and multimodal micro vertical solutions continue to resonate well with our clients. Some examples of value delivered to clients are the modernized enterprise applications of a large US retailer from outdated technology to cloud by leveraging our unique Gen AI solutions.
This resulted in reducing TCU by 40% and reducing time-to-market by 50%. Similarly, we empowered a global human rights organization to build a smart decision engine powered by Gen AI, integrating organizational assets across 170 countries, thereby improving efficiencies of knowledge workers by 50%. In FY ’25, we upskilled more than 50% of our workforce in AI or Gen AI by leveraging the multi-level training programs of our Ignite Academy and as well as the various certification drives that we have instituted in collaboration with our alliance partners.
With that, I now hand it back to Manish.
Manish Tandon — Chief Executive Officer and Managing Director
Thank you. Thank you. Thank you, and Sulkit. Over to the conference call.
Operator
Shall we open the line for questions?
Manish Tandon — Chief Executive Officer and Managing Director
Yes.
Questions and Answers:
Manish Tandon
Thank you. We will now begin the question-and-answer session. Anyone who wishes to ask a question, we press star and one on the touchstone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles.
The first question comes from the line of Sandeep Shah with Equirus Securities. Please go-ahead.
Sandeep Shah
Thanks for the turn and congrats on a good execution in a difficult macro. So just wanted to understand looking at the volatile macro and higher macro concern because of tariff. Manish, if you look at portfolio mix, we have concentration in manufacturing and consumer, which is 27% and healthcare and life sciences is 10%. So roughly one-third or slightly higher as a percentage to revenue as a portfolio may have a direct impact of the tariff-related issue or other measure announced by the US administration.
So are you worried in terms of growth entering FY 2026 or you believe the order book, which has been really great in this year will help us to manage this challenges.
Manish Tandon
Just on the order book, see, as far as micro is concerned, Sandeep, first of all, thank you for the fine words on the results. See, as far as the macro is concerned, I mean, you would have heard from others also. So there is the first order effect which is likely to impact much more on manufacturing rather than consumer services. And fortunately or unfortunately, our exposure to manufacturing and automotive is fairly limited, while for retail it is slightly more.
After 27%, I would say majority is retail. So we don’t expect to be impacted as much. Healthcare and life sciences, again, I don’t think there will be a significant downshift from a pricing — from a overall perspective, primarily because these are relatively price in elastic, it’s an area. I mean a person who has to get a shot has to get a shot, respective of whether it costs $10 or $15. As far as the overall thing is concerned, I would say our order book is going to take us through first-quarter or second-quarter max of this year. And in fact, towards the end-of-the previous quarter, we started seeing some rightward shift of demand, not really cancellations, but rightward shift of demand.
So from a demand perspective , I wouldn’t say I am concerned, but I would say that there is a lot of uncertainty and it is the uncertainty that is concerned.
Sandeep Shah
So thanks for the detailed answer. Very helpful. Sir, Manish last conference call, you also called out if there are no major macro headwinds, we may aspire to grow at double-digit or close to double-digit. That aspiration remains because macro headwinds has gone up. So is there a new outlook or aspiration target you want to disclose?
Manish Tandon
No, aspiration — see, Sandeep, aspiration is always there. You know whims and fancies of 1/4, two-quarter — of two, three months here and there, I don’t think we should be changing our aspirations. We might be changing what is realistic, but at least at this stage, I don’t want to change my aspiration.
Sandeep Shah
Okay, okay. And last question if I can squeeze in. Pulkit, just entering FY ’26, margins could be maintain at close to mid-teens. What I wanted to know apart from wage hike, there could be incremental headwinds to ESOP cost. So can you give puts and takes in terms of entering FY ’26 in terms of margin visibility?.
Pulkit Bhandari
So FY ’26, I think our triangulation is to basically stick with mid-teens and we would — we would like to believe that mid-teens will give us adequate headroom on either side. And hopefully, things will basically improve in the later part of the year, which should kind of further help us stick to this mid-teens outlook.
Sandeep Shah
And any other higher shop cost?
Pulkit Bhandari
Yeah, so I’m calling out, including ESOP cost.
Sandeep Shah
Okay, okay.
Manish Tandon
Please, I think the reaction has been
Sandeep Shah
The question is, have you taken anything on Q4?
Pulkit Bhandari
Yeah. So Q4, there is a marginal impact on account of ESOP, which has been absorbed and what you see is after ESOPs being accounted for.
Sandeep Shah
Okay. Okay. Thanks and all the best will come in the follow-up.
Operator
Thank you. Thank you. Next question comes from the line of Nitin Padmanaban with Investec. Please go-ahead.
Nitin Padmanabhan
Yeah. Hi, good evening. My name is Vijay. Congrats on the strong deal wins. Thank you. So see, from a deal win perspective, if you could just layer some thoughts on how the pipeline has been — is looking like after the strong wins over the earlier quarters? And considering the environment, do you think that you will still be able to sort of deliver maybe 180 to 200 range or you think that becomes a risk-on a going-forward basis?
The second is just a follow-up to what Sandeep was asking. Your thoughts from a PMT perspective as well.
Manish Tandon
Yeah. So on the first thing, see, our order book, see all — a lot of this thing started only in March or March or so, things were very hunky-dory till end of January, mid-February or so. And we started seeing some right shift in-demand when this started. The problem is that Nitin, I said the problem is much more to do with uncertainty than with — I mean, nobody knows how the demand scenario will announced because every day things are changing.
So one thing we are — I’m quite sure that the capital allocation investment dollars which used to come to IT are going to reduce in the short-term because when the environment is uncertain, you don’t want to do capital spending too much at which we are seeing even in TMT moving the needle to TMT, you would have seen that lot of the cloud providers have canceled their new data center, canceled or postponed their data center and new data center projects, right?
So the problem, listen, as I said is uncertainty and it is very difficult to — it’s very difficult to figure out what is going to happen because of the continuous change in shift in policy that we are seeing. So I wish I could answer if I wish I could answer your question definitively. But I am — you know, I just go back to my original thinking, let’s forget about the environment, let’s make sure that we are executing to the best of our ability and let things play-out.
Operator
Mister Tanyja, are you done with your questions MR., are you done with your questions?
Nitin Padmanabhan
Hello. Can you hear me?
Operator
Yes, Mr Taneja, are you done with the questions?
Nitin Padmanabhan
No, I have to ask a question.
Operator
All right, contribute. There was a brief silence. Thank you. Go-ahead.
Nitin Padmanabhan
Okay. Sure. Thank you once again and sorry for the technical issue. Manish, basically, I wanted to get your sense on a couple of things. Over the course of last couple of years, you have focused in terms of improving the mining within your existing customer-base as well as expanding into or pivoting the high-tech vertical towards the new set of customers. Could you talk about the progress on this front through FY ’25 and how should we be thinking about this aspect in-going forward?
And that’s question number-one. And the second question is with regards to our on-site offshore mix. Once again, that is electric, we’ve continued to show progression. How should we be thinking about this now given we’ve got to a level where we are almost on par with peers, does that room leave more room for improvement? Those would be my two questions.
Manish Tandon
All right. So question number-one, how are we progressing? I think we are progressing well on account forming and that is reflected in the fact that the number of $20 million accounts has increased from 4 million to 6, if I’m not mistaken and 5 to 10 also there has been some increase. So we are pleased to see that we are making progress on cross-selling and conforming, but it remains a work-in process and we have to do a — we have to continue to execute on that front.
Your second part of your question was, what was the second part? Manish about the on-site offshore mix. We’ve seen a continued improvisation on this. Yeah, I have said this before. We are — ultimately, we are a client-centric organization. We want to be a clientric organization and we are a client-ensit organization. I am not going to push offshore if my client doesn’t want it, I’m not going to push on-site if my client doesn’t want it.
So I it’s not a parameter that I try and control too much, I would prefer that this be determined by what my customers need rather than by what we are trying to achieve, okay. So we — I prefer to keep an eye on the margins rather than trying to marry too many parameters, looking at too many parameters and getting confused. And frankly, onsite issue is not is not something that I consciously drive towards.
Nitin Padmanabhan
Sure. Thank you. All the best for the future. Thank you.
Shraddha Agrawal
Thank you. Next question comes from the line of with. Please go-ahead. Yeah, hi. Congrats, Manish and on a good quarter. A couple of questions. First of all, how should we look at our South Africa portfolio given recent developments of US aid being stopped there and in light of the exchange movement also in that particular country.
Manish Tandon
Yeah. So South Africa is a key it’s a it’s an important market for. It’s one of the few markets in the world where we are in the top three actually. Our revenues in that market are higher than most of our peers, so to say. So we view the South Africa market as a strategic from two perspectives.
One is, a, we have a larger market-share there and mind share there. So we can do — we have the Brand permission to do interesting and new things and try out new things and which then we use as case studies and so on to open new logos or existing logos with the US and Europe. So from that perspective, South Africa remains a key market for us as per plan. And we will — we continue to grow there. This year was a bit of an aberration, but otherwise, we continue to do well in that market and we are making — we have made a change also. We have moved someone from India to take-over that a senior executive strategy has moved to South Africa or is moving to South Africa to oversee that market..
Shraddha Agrawal
Right. And in terms of demand, you indicated that you saw some right shifting of demand towards the latter half of March. But was there any change in-demand trends in the month of April so-far versus March?
Manish Tandon
So as I said, I mean, because of the uncertainty, there are I mean even my clients don’t know what is coming down the pipe, right? One day that one day the reciprocal duty. Second day there are no reciprocal duties I mean so most of the — most of my clients don’t know what they are — what is coming down the pipe. Actually, and as I mentioned in the call earlier, at least from a first order impact perspective, our exposure to manufacturing and auto is fairly limited, okay.
So we are not impacted as much as some of the other players might be as of now. But the second order impacts, nobody knows just now. So we I hope I mean as much as I told Nitin also, much as I would like to be able to predict what is coming down the pipe, I don’t think we are in a good position to see what — what is coming down the price.
Shraddha Agrawal
Right. Just one last question, Manish. We’ve seen three back-to-back quarters of very strong BTCV. I understand the macros have turned a bit volatile, but given if we see some improved macro conditions, do we expect a better TCV2 revenue conversion maybe a quarter or two down the line?
Manish Tandon
Or TCT — IR TCV to revenue conversion is pretty high actually. So if you look at the last full-year, the TCV reported is INR776 million or something. And our revenues are in the INR625 plus million range. And of this INR770 million, I think 600 plus million has happened in the last 3/4. So our bookings to bookings to revenue conversion is pretty phenomenal.
Shraddha Agrawal
So we would expect to maintain the same range rather than further improvement on this metric?
Manish Tandon
It’s very good already. I don’t think we should be looking at improving this metrics.
Shraddha Agrawal
Got it. Yeah. Thank you. Thanks, Manish, and all the best.
Operator
Thank you. Next question comes from the line of Amit Chandra with HDC Securities. Please go-ahead.
Amit Chandra
Yeah, thanks for the opportunity. Sir, my question is on the strong TCV number that reported. Obviously, the 3rd-quarter of strong TCV. So in this number, was there any impact of any macro changes that started to happen at the end of March in this number? And now in terms of how we’re progressing in April, you said that if we maintain this kind of TCE number, then obviously, our growth number would be better than what we did last year.
So in terms of TCVs, if you can also indicate how is the pipeline looking in terms of large deals and what — like what part of the pipeline is AI related?
Manish Tandon
So first of all, this — I don’t know-how many of you noticed there was this press release that we did on ESCO infrastructure thing. So that was a large deal by our definition and that’s why it was a material deal. So we reported with the press release. So one reason for the good performance on the order booking is that deal overall. Regarding April, I mean, frankly, I have not looked at the April numbers very seriously. As far as order bookings are concerned, because mostly these numbers get finalized towards the end-of-the month when we close our books.
So I cannot give you a very definitive answer on that. But from a pipeline perspective, I don’t think there is any significant material change that we see as of now?
Amit Chandra
Okay. And on the AI part, what part of the pipeline or deal TCV is linked to AI related initiatives?
Manish Tandon
So incidentally, we have just started tracking this metric and I wanted to do it for two quarters before I start announcing it to the street as to what percentages we are looking at because currently, this was the first-quarter we did it and there was no benchmark available to do it. But needless to say that in every deal, we are tracking how much whether the deal is AI influenced or whether that deal is selling of AI-related services and so on.
And we are tracking it closely. Hopefully, over the next couple of quarters, we will start reporting that number also.
Amit Chandra
Okay. And on the vertical, obviously, we have started to see some kind of stability there. So is it fair to assume that the issues related to top-line is mostly behind? And in terms of the macros which is not deteriorating, we will not see any further issues in the TMT vertical. And also in healthcare Life Sciences and, like you mentioned that we don’t have exposure to the verticals which are directly stretched to a led to a higher extent. So like what’s the reason for weakness in MCS in this quarter?
Manish Tandon
NCS, the reason for the weakness, see, again, this is all relative. So of course, I’ll take TMT, don’t read too much into TMT numbers because the growth there is furlough related, okay. Q3 has a lot more furlough than TNT than Q4. So don’t — please do not read too much into those numbers. MCS, we were coming off a growth of about 7% sequentially quarter-on-quarter. There was a budget flush and holiday retail related spending at a couple of accounts, which helped us and obviously, things caught up a little in this good quarter and the same also case with healthcare and Lifeline.
Amit Chandra
Okay. And now lastly on the margins, obviously, you said that the margins have been stable at around 15% levels and we are planning it to take it to mid-teens. So in a scenario where we don’t see any growth acceleration, then also in that scenario, we have levers to maintain the margin at these levels
Pulkit Bhandari
Mid-teens I mentioned mix. Yeah. So the limited point is they are in mid-teens range and I think we plan to basically keep them in the same mid-teens range going-forward as well. And anything over and above that will get invested back-in the business? And that’s what we’ve been kind of working towards here.
Amit Chandra
Thank you. Okay. Thank you and all the best.
Operator
Thank you. Next question comes from the line of Sandeep Shah with Equirus Securities. Please go-ahead.
Sandeep Shah
Yeah. Yeah, Manish, just wanted the update in terms of how many large deals we have signed in FY ’25. And if I’m not wrong, the definition is about INR25 million. And how do you see the pipeline of large deals entering FY ’26? And do you believe FY ’26 could be a better year in terms of large deal Closure versus FY ’25 because that effort and focus has just started in-between FY ’25.
Manish Tandon
Yeah, so I would say, I would say two is what I remember large deals. And I definitely hope that FY ’26 will be better than FY ’25. Okay. And any commentary on a pipeline, how does it look like on large deal? In large deals see, there are two types of large deals one where things are coming as in the market and second is where you have to create a large-scale. So the pipeline for where we are trying to proactively create large fields is very good.
The pipeline for RFP is where anyway the probability of coming is very low, that is fairly muted and that has been muted for us for quite some time.
Sandeep Shah
Okay. Okay, okay. And just our clarity, if later part of the March has seen some delay in decision-making and right shifting. Do you believe this may have a full-quarter impact in April, May, June or would be deals which we have signed are scheduled to start on a desired date in terms of ramp-up up.
Manish Tandon
I mean you have to have you have to have so the short answer is that what I was expecting say in January to do in Q1, I don’t think that we will be doing that number in Q1, okay. But you know when you look at the next quarter, you always have an aggressive number in mining subject to conditions being stable, but the conditions have changed. So I don’t think that I don’t think that we are in the — we are going to do what we thought in January that we will do in this quarter. But whether we are going to have growth or not, I can say that at least as of now, I see growth ahead in Q1 also.
Sandeep Shah
Okay. Thank you. All the best you.
Operator
Thank you. Next question comes from the line of Nitin with Investec. Please go-ahead.
Nitin Padmanabhan
Yeah, hi. Sorry, I kept getting disconnected, so I don’t know if you have answered these questions. Broadly from a — I just wanted your thoughts on whether the deal pipeline has sort of increased or gone down. And second, I wanted your thoughts on how is the uncertainty sort of manifesting in your portfolio right now? Are you seeing sort of pauses delays and is that quite meaningful in April? So that’s the other bit.
And yeah, so those are the two basic things. I think you did mention that as of now, it looks like we have growth, but if you could just contextualize these two things, it will be helpful.
Manish Tandon
So yeah, so I answered. Unfortunately, you got disconnected at that end. So I answered that pipeline as of now and pipeline is a very large number that is at. So there is not much of a material change in the pipeline situation. But there is some amount of right shifting of demand that we saw in March, which we are continuing to see in April, okay. So hopefully, all this trade-related stuff is going to get resolved soon enough but as I said right in the beginning, the macro is not very strong and that will — that is reflecting in what we are seeing over.
Nitin Padmanabhan
Right, right. Got it. Got it. That’s helpful. Thank you, Manish and all the best.
Operator
Thank you. Thank you. Next question comes from the line of Girish Pai with BOP Capital Markets Limited. Please go-ahead.
Girish Pai
Yeah, thanks for the opportunity. Manish, you guys have struck a deal with Tesco. I think you mentioned it is an infra deal. Was it a vendor consolidation deal? And if so, what were the considerations that led Tesco to choose you versus an existing vendor, an incumbent vendor?
Manish Tandon
No, actually, this was a business separation that Tesco Money Services still was doing and so there were some existing vendors or whatever, but we are actually setting up a complete greenfield environment in the separated business for the separated business. So you can think of this as you know, if you do a separated business, we do a transition services agreement and then you get time to get the new thing going before you switch-off from the transition services agreement. So that is what exactly we are doing in this.
Girish Pai
So the investments are ongoing or
Manish Tandon
It’s a greenfield implementation.
Girish Pai
Okay, will you be onboarding any employees of Tesco and will that or will there be any knowledge transfer PVO? This more. This is a new implementation. Okay, okay. Any vertical — vertical outlook you can give for FY ’26, how do you think various verticals will play-out?
Manish Tandon
For us or for use,
Girish Pai
For you, for you
Manish Tandon
Well at this moment we, we seem to be doing okay very well in BFSL BFS. We seem to be doing quite okay in MRCL, which is manufacturing, consumer and healthcare life sciences. And we seem to be flattening out in PMT. So this is the situation as of — as things stand today. So things might change over the next couple of months, but that is — that is how things look like as of today. Okay. My last question has to do with compensation.
Girish Pai
Have you decided to increase compensation this year and would — if that does happen, would it be around the same time you generally do it and will the quantum be the same?
Manish Tandon
No, we announced our compensation salary hikes effective first July and typically unless the sky falls on our head we try to make sure that we take care of our employees and get adequate salary heights as we go along. So yes, we have budgeted some amount of salary heights of this year but let’s see how the market pans out in the next couple of months.
Girish Pai
Okay. One last question, if I may squeeze that in. Everybody seems to be interested in an initiative on the GCG side. Do you people have anything on that particular front.
Manish Tandon
They are interested in GCC now. We have been doing GCC for the last two years and lot of at least we are partners with at least three or four GC3 and we are a very, we have a very unique proposition on GCC, which is resonating very, very well with our customers and we have success stories, case studies to prove why we have the best-in GCCs that are out there and if there is a GCC deal in which we are invited, there is a very, very-high probability that we end-up in the top two. Just not bring it outright.
Girish Pai
Okay, I just wanted to understand, is GCC more about staffing and staff augmentation or you said you do something unique, what exactly would that be I can see GCC is —
Manish Tandon
Look, I don’t want to give out a secret call, but it is I would say while our competitors look at as star augmentation, we look at it as creating the right experience For the parent organization and also for the employees of the. So that is what we do in this, but I don’t want to let out secret.
Girish Pai
Okay, thank you very much.
Manish Tandon
If you have if you have anyone, any clients are interested, I’m happy to walk them through
Operator
Our next question comes from the line of Naveen Baid with Nuvama Asset Management. Please go-ahead,
Naveen Baid
Thank you for the opportunity. Just wanted to check I joined the call a little late. Was there any component of pass-through revenue for the quarter? I’ll give you. Do you want to take that?
Vijayasimha Alilughatta
Yeah, I’ll take that. So there is — we — while you may say you may see traded goods, but it’s not pass-through because it’s part of the overall deal construction, mostly managed services kind of transaction. I’ll give you the exact number in 20 seconds. Do you have any other questions apart from that?
Girish Pai
No, that’s it.
Vijayasimha Alilughatta
INR1.6 million.
Naveen Baid
In general, we are 1.5 million. In general, in general, we don’t — we don’t recognize resale revenues. So we do — if we are doing some resale and all, we are doing the — we do net accounting, net accounting.
Manish Tandon
Yeah. In cases — in cases where we are doing complete managed services where licenses, etc. are also in our scope, that will only do.
Naveen Baid
That’s helpful. Thank you.
Operator
Thank you. Next question comes from the line of Manik Taneja with Axis Capital. Please go-ahead.
Manik Taneja
And what was the adverse impact of lower number of working days in GSL? How — and how does this arithmetic up when you think about the same dynamics for June compare to
Manish Tandon
You are the specialist on this,
Vijayasimha Alilughatta
I guess, so you will have to pay this. Yes, look, I think in the Q1, there is a higher number of working days and the impact is very difficult to predict right now, given the fact that I think there are still a lot of volatility in terms of client budgets and stuff like that. And for us, I think many of the things that we have is fixed capacity/fixed /fixed milestone-based stuff. So that also kind of — that will not be impacted by the number of working days.,
Manik Taneja
Vijay, I understand that, but if you can just help us understand because my sense is there is at least two more working days in April, May-June. I know there are lots of look,
Vijayasimha Alilughatta
The working days is different across different geographies. If you look at Europe, this sector much lower. US, I think is whatever one extra days and India, we have two, three days. So yeah, it is — it varies and depending on the business mix where the work happens, we will obviously get the corresponding benefit of the revenue numbers because of the higher working days in P&L.
Manik Taneja
Sure. Sure. Thank you. That’s quite helpful.
Operator
Thank you. Thank you. Next question comes from the line of Devindra, an Individual Investor. Please go-ahead.
Unidentified Participant
Hello. Hello.
Manish Tandon
Yes.
Unidentified Participant
Hi, thanks for giving opportunity. I just want to know your partner with Tesco, that Tesco, how much revenue will be generated and again it will be a commission.
Manish Tandon
Hello so we do not big revenues
Unidentified Participant
Okay hello
Manish Tandon
We do not call-out any client-specific revenues, so sorry we will not be able to take that
Unidentified Participant
Okay, okay, fine,
Manish Tandon
Okay, okay,
Operator
Sir a reminder to all the participants that you must press star and 1 to ask a question. Once again, a reminder to all the participants that you may press star and one to ask a question. The next question comes from the line of Kirish Pai from BOP Capital Markets Limited. Please go-ahead.
Girish Pai
Yeah, Manish, with the uncertainty that is there, has the competitive intensity gone up and have players started bidding more aggressively on whatever business is out there.
Manish Tandon
As if the demand shrinkage happen, then the competitive intensity will go up without — without a doubt. So — but again, it is — it is too early to Call-IT out. Remember the tariffs first major disruption has been caused by tariffs, which were first really announced at a global level only on 2 and today is ASU 25. So it is difficult to — and there also there is a lot of uncertainty. But I can tell you that if there is a demand compression and competitive intensity will increase.
Girish Pai
Okay. You also take some examples of Gen AI where you’ve generated significant amount of productivity gains for customers. So are the savings being plowed back into something new or are the savings going somewhere else like giving out big dividends or a buyback of shares and something like that or it still remains in the IT services spend area.
Manish Tandon
So it depends on what kind of see, first of all, whatever are the benefits we will always share it with the client we will not — I mean, no client will allow you to — the industry is relatively. No client will allow you to make abnormal gains overall on a consistent basis. So we are using AI frankly as a differentiator and as a competitive tool to win against competition and to create an experience for our clients and our employees. So at this stage, it is too early to say that there are some significant benefits which are coming to our bottom-line. If that was the case, we would have actually increased our margin percentages, but that is obviously not the case.
Girish Pai
No, no, I was in discussing about benefits to you. I was talking of savings generated for customers and the customers are reinvesting that into IT services or is it going somewhere else?
Manish Tandon
So I think see what AI is doing really is one is projects which are marginal from a business case perspective. If you leave with AI, then it is easier to make the business case for them. So for clients, certain marginal projects become attractive to do if you use AI. So that is one thing that is happening. Second is the savings that the client is generating is mostly going towards IT itself. It is not that it is going to work. I mean it depends on the business case, obviously, but mostly it is — I mean nobody is saying no see, nobody is — no client is going and no CIO is going and telling his board that you can cut my budget now that I have started using.
So at a macro-level, you can say that you know, mostly if there are — if you’re delivering IT savings that is being reinvested in the IT side of the business.
Girish Pai
Okay. Thank you.
Operator
Thank you. Next question comes from the line of Nitin with Investec. Please go-ahead.
Nitin Padmanabhan
Yeah, hi. Thank you for the opportunity again. Manish, in the current context, how are you looking to sort of then use this opportunity for anything specific maybe in terms of acquisitions or any standout situations or opportunities that sort of come across to you that you could do in The current context considering the weakness?
Manish Tandon
So we are actively looking at acquisitions, but the uncertainty works both ways. And if there are — if there are attractive assets available because of the uncertainty, then I also need to take care of the uncertainty on my side, right? And we are a publicly-listed company. We have to deliver quarter-over-quarter. We are not a private-equity is an enterprise where you get two years to turn things around and hence you can buy assets from the cheap and turn them around side.
So uncertainty works both ways. While you might get assets from the cheap, but we also need to make sure that the cheapness is temporary, not permanent and that is a difficult call to say. But to answer your question, we continue to look at assets on an ongoing basis and if the financing a practice, we will go for it. We have the cash on the balance sheet to make it happen.
Nitin Padmanabhan
So that’s helpful, Manish. Thank you so much and I’ll have you back.
Operator
Thank you. Ladies and gentlemen, due to time constraints, we have reached the end of question-and-answer session. I would now like to hand the conference over to Mr Manish Standan for closing comments.
Manish Tandon
Thank you. I think first of all, thank all of you for being here and on this, I know it’s the Friday evening in India and I’m sure you have many more, much better and interesting things to do. But as we close this year, I want to take a moment to acknowledge the well-rounded performance that we have delivered in a landscape marked by geopolitical uncertainty, shifting client priorities and macroeconomic pressures, our organization derives confidence from our strong client satisfaction scores, robust order book and a healthy pipeline.
So thank you very much and please enjoy the rest of your evening and have a great weekend.
Operator
Thank you. On behalf of HDFC Securities, that concludes this conference. Thank you for joining us. You may now disconnect your lines