#EBITDA #MARGIN

In FY25, the EBITDA margin contracted by 41 bps YoY to 12.8% (v/s 13.2% in FY24). The projects & manufacturing business EBITDA margin expanded by 13 bps YoY to 8.29%. The EBITDA margin including the finance cost of financial services business and finance lease activity contracted by 29 bps YoY to 10.3% in FY25. In Q1 FY26, the EBITDA margin contracted by 18 bps YoY to 12.6%. The EBITDA margin including the finance cost of financial services business and finance lease activity contracted by 27 bps YoY to 9.9% (v/s 10.2% in Q1 FY25). The contraction in margin was due to the change in revenue mix. Segment wise, the infrastructure projects EBITDA margin stood at 5.7%, energy business 7.3%, Hi-tech manufacturing 15.1%, IT & Technology services 19.5%, and others 32.9%.

#PAT #MARGIN

In FY25, the PAT margin contracted by 13 bps YoY to 6.9%. Excluding exceptional gains, the adjusted PAT margin contracted by 27 bps YoY to 6.7%. The consolidated PAT margin (excluding exceptional gains) stood at ~5.7% (v/s ~5.9% in FY24). In Q1 FY26, the PAT margin expanded by 55 bps YoY to 6.8%.

#ROCE

In FY25, the ROCE improved led by an increase in the overall PBIT. L&T has been working on bringing an overall cost and operational efficiencies for achieving profitable growth. The key endeavor is to lower costs as well as put greater emphasis on contract and project management. In the infrastructure segment, the company is witnessing margin pressure due to cost pressure witnessing in the legacy projects which taken prior to Covid. The margin recovery in infrastructure projects shall be seen in coming quarters on account of completion of these legacy projects.

#ROE

In FY25, the return on equity increased to ~19.3% aided by high increase in profit. In FY21, the ROE declined on account of lower profit due to exceptional impairment charge.

#COMPANY #POTENTIAL

Infrastructure Sector: • In the budget 2024-25, the government has increased the outlay for capital expenditure on infrastructure sector by 11% from ₹10 lakh cr to ₹11.11 lakh cr. • Government policies: Government has been working on reducing the bottleneck and stimulate the growth to kick start spending on various initiatives such as ‘Housing for All’ and ‘Smart Cities Mission’. The government plans to invest ₹2.05 trn (US$31.8bn) in the smart cities mission. 100% FDI is permitted under the automatic route across various infrastructure sectors. • Attractive opportunity for the sector: In our view, healthy fundamentals, attractive valuations along with strong earnings growth makes this sector an attractive investment opportunity. Opportunity in roads continues to remain huge. Bharatmala itself is a ~₹6.3 trillion plus opportunity in the road sector. Various other schemes such as the Regional Connectivity Scheme (RCS) and coastal shipping give opportunity for development of airports and ports. • Increasing foreign investments: Over the last few years, India witnessed a substantial rise in foreign investment. The major players being China Harbour Engineering, DBS, Mizuho Financial Group, Cube highways, Canadian pension funds, etc. FDI inflow in India stood healthy at US$7.3bn for the period July-Sep’19. The sector has been a prime focus in getting FDI inflows with deals such as GIC investment in IRB’s BOT assets, CPPS investment in SIPL, Cube highways buying assets of Infra companies, etc.

#COMPANY #OUTLOOK

• For FY26, the company anticipates 10% growth in the consolidated order inflow. • The company is expecting 15% growth in consolidated revenue in FY26, led by healthy execution of large order book. • In the projects & manufacturing business, the company is targeting an EBITDA margin of 8.3%-8.5% in FY26. • The company expects net working capital to revenue ratio at 12% in FY26. • The consolidated order book as on 30th June 2025 stood at ₹6,12,761 cr, with international orders having a share of 46%. Segment wise, infrastructure constitutes 61%, energy 30%, hi-tech manufacturing 6% and others 3% of the total order book. • Water projects related order constitutes ~₹50,000-₹60,000 crore. Most of the water projects are state projects from Uttar Pradesh, Rajasthan, Bihar and Madhya Pradesh • The break-up of domestic order book (54% of total order book) stood as: 14% from central government, 25% from state government, 34% from public sector corporations of state-owned enterprise and 27% from private sector. • The geography-wise break-up of order book stood as: 54% from India, 37% from Middle East and 9% from rest of the world. • The company has a strong order prospect pipeline of ~₹14.81 trillion for the remaining nine months. Domestic order prospect pipeline is at ~₹6.13 trillion and international at ~₹8.68 trillion. • On 11th November 2024, L&T Technology Services Limited (LTTS) acquired 100% stake in silicon valley based Intelliswift for a consideration of $110 million. The objective of the acquisition was to deepen the company’s offering across software product development, platform engineering, digital integration, data and artificial intelligence (AI). This acquisition got fully closed in January 2025.

Larsen & Toubro LT 3600-3960
Expected level 4500
Support 3100

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Zensar Technologies company details report

NEWLEADERSHIPDELIVERYEVIDENTFROMIMPROVEDFINANCIALS

Zensar isanewturnaroundstoryunfoldingatRPGgroupledby its newleadershipteam.Thisisevidentfromstrategicchangesundertakenlike: ✓CEOManishTandonleadingZensar’sstorytobringinstabilityandagility ✓ Largedealwinsfueledbyincentivizingsalesteamstructure ✓Clientcentricityreflectedinimprovedcustomerexperiencescores Thenewinitiativesaregetting reflectedoncompany’s industry lowest attrition rates, better customerexperiencescoresand improvingprofitability,whichhas witnessed40%CAGRfromFY23-25.

FOCUSEDSERVICESASONEVALUEPROPOSITIONDIFFERENTIATES

Zensar’s focused services clubbed together as one value proposition has witnessedgrowthof8.2%YoYv/soverallTop-linegrowthof5.4%YoYinFY25. Theseservicesare resonatingwellwith largeclientsmeeting their customized needsatonego.Thisvaluepropositionisalsoleadingnon-TMTverticalstodrive double-digit growth for thecompany, further aidedbybroad-basedgeography growthstrategywithexpectedrecoveryinSouthAfricanmarket.

Zensar is putting in extra effort and focus on executing large deal closures, which it expects to be better in FY26 versus FY25. Though, the probability of RFP led large deals coming in market has stayed muted for quite some time, however, Zensar is proactively creating large deals and there the deal pipeline for Zensar remains good. This is led by the: ✓ New incentive structure- Zensar has announced new incentive structure for sales team by giving them over 100% performance-based bonus to drive large client accounts by doing more of up-selling and cross selling. New leadership designs new incentive structure to drive large deal growth Reduction in Top client dependence offset with net new wins thereby derisking model for sustainable long-term growth ✓ Newplatform for sales function– Internally, the company has established a new platform, comprising strategic alliances, pre-sales and inside sales operations. This has enabled the company to recently win a large deal from UK based Tesco Insurance. ✓ Higher net new wins– The new incentive structure is enabling higher proportion of net new wins for Zensar, which stands in range of 60-65%. This is despite of the concerning global economic outlook. Thus, we believe the company’s focus on large client accounts is reflecting in revenue growth of Top 20 clients account, while that of Top 5 & Top 10 client contributions is gradually coming off with more additions of net new wins thereby de-risking the model aiming for more sustainable growth in long-term. Reducing dependen

LEADINGTCVCONVERSION,STRONGCASH,POISESZENSARFORLEAP

StableTCVwinswith impressive industry leading revenueconversion rateof 90%buildsconfidenceonfutureexecutional capabilitiesofZensar.Moreover, it haswitnessed35%CAGRincashequivalentsfromFY19-25,withzerodebton books&Mcap/OCFratioof30x,whichretains investmentcomfort.Webelieve, Zensar’sstrong liquiditypositioncompels for strategicbuyouts/ investmentson largedeals,whichwouldhelpaccelerateitsgrowth&profitabilityinfuture.

ZENSAR’SAIPLAYBOOKTODRIVEINTELLIGENTOUTCOMES

Ledby technology innovationatheart,Zensaraims torideontheAIplaybook, whichiscurrentlywitnessinggoodclientconversationsacrossITIndustry.44%of Zensar’sdeal pipeline is ledbyAIclientconversations.Enterprisesgloballyare looking for strong vertical led value propositions to invest on, whichwould acceleratetheirgrowthandprofitabilityfor long-term.Hence,Zensar isfocussing onR&DinitiativesthroughZenLabstocomeoutwithlowcost,better technology offeringsthatwouldaddgreatvaluetoclient’sbusinessoutcomes.

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