This defence stock has zoomed 110% from June low; raised Rs 1000 cr via QIP

Zen Technologies share price today hit a record new high of Rs 1,876.05, up 5 per cent on the BSE in Monday's (August 26) intraday trade. The rise in the share price came after the company successfully raised Rs 1,000 crore through its first-ever qualified institutional placement (QIP).

The stock price of the defence simulation training equipment and counter drone solutions provider surpassed its previous high of Rs 1,865, touched on August 22, 2024. In the past one month, the market price of Zen Technologies has appreciated by 32 per cent. It has zoomed 110 from its June month low of Rs 893.80 on the BSE.

In an exchange filing, Zen Technologies said the company has allocated 6.25 million equity shares to qualified institutional buyers (QIBs) at an issue price of Rs 1,601 per share.

Zen Technologies had launched the QIP on August 21, 2024, and closed on August 23, 2024. It saw significant interest from both domestic and international investors, with the issue getting oversubscribed by around 5 times, underscoring strong confidence in the company's strategic vision and market position.

Key investors participating in this QIP included Kotak Mutual Fund, White Oak Offshore Fund, White Oak Mutual Fund, Motilal Oswal Mutual Fund, and Bandhan Mutual Fund.

The company said the proceeds from the QIP will be strategically deployed to accelerate Zen Technologies' growth plans. These include exploring inorganic growth opportunities and funding working capital requirements for the expected rapid growth in the coming years. This capital infusion, it added, aligns with the company's long-term vision to penetrate adjacent markets (Naval and Air Force) to continue deep R&D in the field of counter-drone solutions, and expand its footprint in the global defence market.

Zen Technologies' products are indigenously designed and developed, aligning with the Indian government's 'Make in India' and 'Atmanirbhar Bharat' initiatives, which aim to promote self-reliance in defence manufacturing. The company's product portfolio includes a wide range of simulators, such as tank, driving, gunnery, and flight simulators, as well as comprehensive anti-drone systems designed to detect, track, and neutralise hostile drones.

Financially, in the April to June quarter (Q1FY25), Zen Technologies' revenue from operations jumped 92 per cent year-on-year (Y-o-Y) to Rs 253.96 crore, as against Rs 132.45 crore in Q1FY24. Operational earnings before interest, tax, depreciation, and amortisation (Ebitda) was up 56 per cent Y-o-Y to Rs 103.20 crore, and net profit grew 57 per cent Y-o-Y to 74.18 crore.

The proliferation of unmanned aerial vehicles (UAVs) or drones has emerged as a significant security challenge globally, creating a pressing need for effective counter-drone solutions. This trend has opened up substantial opportunities for companies like Zen Technologies that specialise in counter-drone technologies.

According to a report by Global Market Insights, the counter-drone market was valued at approximately $1.9 billion in 2023, with a strong growth forecast reaching $15.3 billion by 2032 at a CAGR of 26 per cent. This rapid growth is driven by the increasing incidents of security breaches by unidentified drones and the rising adoption of counter-drone measures by defence organisations worldwide, the company said in its FY24 annual report.

In India, the counter-drone market is experiencing significant growth, driven by government initiatives and increasing security concerns. This growth is supported by the government's focus on indigenous defence production and the increasing adoption of drones across various sectors.

Recent geopolitical events have further underscored the urgency of developing robust counter-drone capabilities. The ongoing conflict in Ukraine has demonstrated the strategic importance of drones in modern warfare, with both sides extensively using UAVs for reconnaissance and offensive operations. According to a report by the Royal United Services Institute (RUSI), the widespread use of drones in this conflict has "fundamentally changed the nature of warfare", the company said.