Zen Technologies shares tank 20% post Q3 results; plunges 52% in 1 month

Zen Technologies share price today hit an eight-month low of Rs 1,079.35 on the BSE on Monday, February 17, 2025. The shares were locked in the 20 per cent lower circuit at 09:36 AM on the back of a slowdown in order inflow. The company said it bagged new orders worth just Rs 1.69 crore in the December 2024 quarter (Q3FY25).

As on October 1, 2024, the company's order book was Rs 956.74 crore and the company executed orders worth Rs 141.52 crore in Q3FY25. As on December 31, 2024, Zen Technologies' total order book stood at Rs 816.91 crore, the company said in its investor presentation.

With today's decline, the stock price of the smallcap company has plunged 52 per cent in the past one month. It had hit a 52-week high of Rs 2,627.95 on December 24, 2024.

In the previous two calendar years, Zen Technologies shares had zoomed over 200 per cent in each year. In calendar year 2024, Zen Tech stock surged 207 per cent, while in calendar year 2023, it had skyrocketed 333 per cent.

Meanwhile, in Q3FY25, Zen Technologies reported 22 per cent year-on-year (Y-o-Y) rise in standalone profit after tax (PAT) at Rs 38.62 crore as against Rs 31.67 crore in Q3FY24. On a sequential basis, the company's net profit declined 40.8 per cent from Rs 65.25 crore in Q2FY25.

The company's earnings before interest, tax, depreciation and amortisation (Ebitda) margin contracted to 35.90 per cent in Q3FY25 from 47.34 per cent in Q3FY24.

While Zen experienced a rise in profitability due to higher other income in Q3FY25, the management said it expects to achieve Ebitda target of 35 per cent by the end of the financial year.

Revenue from operations, meanwhile, grew 44 per cent to Rs 141.52 crore from Rs 98.08 crore in the year-ago quarter. The management said the company is on track to meet stated guidance of Rs 900 crore revenues for FY25.

"The Union Budget 2025 demonstrated the government's commitment to strengthen the defence sector, with a record allocation of over Rs 6.81 trillion for the Ministry of Defence, marking a 9.53 per cent increase from FY25. This includes a substantial Rs 1.80 trillion earmarked under the Capital Budget of Armed Forces, providing significant tailwinds for the industry. The company's strategic focus on securing new contracts and diversifying portfolio ensures sustained revenue visibility and positions the company well for continued growth," the management said.

The company's revenue, it added, depends on the ability to successfully bid for orders and their timely execution. This risk is mitigated by favourable government regulations and the company’s well-established market presence.

'Zen' group is the largest supplier of simulation training equipment and anti-drone systems in India. Its market position is strengthened by continuous research and development (R&D). The company benefited significantly after the roll out of the Defence Production and Export Promotion Policy (DPEPP) and the framework rolled out by the Ministry of Defence (MOD) in September 2021, leading to increased utilisation of simulators for training the armed forces.

Zen Technologies is engaged in designing, developing, and manufacturing state-of-the-art simulators. The company primarily caters to training simulators for police forces, anti-drone systems, and paramilitary and armed forces, along with government departments in sectors such as transport, mining, and infrastructure, as well as the civilian market.