The brokerage firm, in a note, said that Zen Technologies shares are well-positioned to capitalise on the strong growth potential in the Anti-Drone Systems (ADS) space. The company possesses in-house capabilities in core components of an effective ADS and has an edge in both soft as well as hard-skill solutions, the note said.
Why Zen matters?
The recent conflicts have underscored the need for ADS to safeguard the country’s expansive borders and critical infrastructure such as airports and nuclear power plants. This particular area offers an estimated Rs 10,000 crore opportunity over the next five years, Antique opines.
Zen also holds a strong foothold in simulation-based training solutions for the armed forces.
Zen wrapped up FY25 with an order book of Rs 690 crore, down 50% over the FY24 closing order book. The company was expecting orders of Rs 800 crore by 3QFY25, some of which were delayed, and now it expects to win these orders by 1HFY26.
“We believe that the orders may have been delayed due to the government prioritising finalisation of emergency orders over the regular ones. Nevertheless, we expect order intake to resume traction in FY27E and FY28E, given the urgency in countering threats from drone strikes during war and against terrorist strikes,” Antique noted.
Based on the potential, Antique estimates Zen to clock a consolidated revenue, EBITDA, PAT CAGR of 29%,25% and 26%, respectively, over FY25-28E.
Zen had a lackluster Q1 with consolidated net profit declining 33% year-on-year and 53% quarter-on-quarter to Rs 54 crore, while the revenue from operations fell 38% and 51% on a YoY and QoQ basis to Rs 158 crore.
The Earnings Before Interest, Taxes, Depreciation and Amortisation (EBITDA) in the quarter under review stood at Rs 65 crore, down 42% YoY and 53% QoQ.
Caveats
While the company has delivered impressive profit growth in recent years, near-term earnings visibility is clouded by delays in order finalisation, which may lead to a temporary pause in growth in FY26E, Antique points out.
Competition
Zen’s competitors are Bharat Electronics (BEL), Axiscades Technologies, Apollo Micro Systems, and Solar Industries.
Zen Technologies share price history
Zen has significantly underperformed the markets, with the share price falling 17% in the past one year. On the year-to-date basis, the prices are down 43%.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
