Zen Technologies Stock Plunges 20% After Q3 Earnings Despite Strong Order Book

Zen Technologies shares hit a 20% lower circuit after Q3 results, despite a 30% YoY rise in net profit and a strong ₹816.91 crore order book. Revenue surged 53% YoY but declined sequentially, impacting investor sentiment. Analysts remain optimistic, citing long-term growth potential and oversold technical indicators.

CONTENTS:

• Zen Tech Shares Hit 20% Lower Circuit After Q3 Results
• Zen Technologies Shares Hit 20% Lower Circuit Amid Market Sell-Off
• Multibagger Defence Stock in Focus After 30% Rise in Q3 Net Profit

Zen Technologies Stock Plunges 20% After Q3 Earnings Despite Strong Order Book

Zen Tech Shares Hit 20% Lower Circuit After Q3 Results

Shares of Zen Technologies plunged to the 20% lower circuit at ₹1,080 on February 17 following the release of its Q3 financial results. While the drone manufacturer’s earnings showed year-on-year growth, the figures revealed a sharp decline compared to the previous quarter.

Financial Performance

Zen Technologies reported a net profit of ₹38.62 crore for Q3, marking a 22% increase from ₹31.67 crore in the same period last year, primarily driven by higher other income. However, on a sequential basis, net profit nearly halved from ₹65.24 crore in the previous quarter.

Revenue followed a similar trend, surging 44% year-on-year to ₹141.52 crore from ₹98.08 crore. However, it registered a significant 41% drop compared to ₹241.69 crore in Q2, highlighting a sharp sequential slowdown.

EBITDA margins reflected a mixed trend, weakening to 35.90% from 47.34% a year ago but improving slightly from 35.12% in the previous quarter.

Management Outlook & Acquisitions

Ashok Atluri, Chairman and Managing Director of Zen Technologies, stated, “This quarter saw increased profitability due to higher other income. However, we remain confident of achieving our EBITDA target of 35% and PAT margins of 25% by the end of the financial year.”

The company’s order book remained strong at ₹816.91 crore as of December-end, giving the management confidence in sustained growth for the upcoming quarters.

Additionally, Zen Technologies made several strategic investments, including:

• Acquiring a 100% stake in Applied Research International Private Limited and ARI Labs Private Limited in multiple phases.
• Acquiring a 45.33% stake in Bhairav Robotics Private Limited through subscription.
• Acquiring a 51% stake in Vector Technics Private Limited via subscription.

Despite the recent stock decline, these acquisitions signal the company’s long-term growth ambitions.

Zen Technologies Shares Hit 20% Lower Circuit Amid Market Sell-Off

Zen Technologies Ltd. shares hit the 20% lower circuit on Monday, February 17, marking their steepest decline since March 12, 2020. The drop comes amid a broader market sell-off, impacting even some of Dalal Street’s top-performing stocks.

Stock Performance & Financials

After experiencing a remarkable sixfold surge over the past two years, Zen Technologies saw its sharpest fall in five years. The defense company reported a net profit of ₹40 crore for the December quarter, up from ₹30.58 crore a year ago. Revenue increased by 53% to ₹152 crore, while EBITDA surged 42% to ₹66 crore. However, EBITDA margins declined to 38.01% in the quarter.

As of December 31, 2024, the company’s total order book stood at ₹816.91 crore, reflecting a strong pipeline of future business.

Market & Analyst Outlook

Despite the sharp decline, brokerage firms such as Motilal Oswal, ICICI Securities, and Nuvama maintain a ‘Buy’ rating on Zen Technologies, with target prices ranging from ₹2,200 to ₹2,535 per share.

From a technical perspective, the stock’s Relative Strength Index (RSI) stands at 23.9, indicating it is in the oversold zone, which may suggest a potential rebound. Zen Technologies has a one-year beta of 1.1, signaling high volatility. The stock is currently trading below its 5-day, 10-day, 20-day, 50-day, 100-day, and 200-day moving averages.

At present, Zen Technologies shares are locked at ₹1,079.35, experiencing profit booking after a 34% rise over the past year.

Multibagger Defence Stock in Focus After 30% Rise in Q3 Net Profit

Zen Technologies is in the spotlight after reporting a 30% year-on-year increase in net profit for the quarter ended December 2024. However, amid a broader market correction, the stock closed 7% lower at ₹1,349.15 on Friday, bringing the company’s market capitalization down to ₹12,181 crore on the BSE.

Stock Performance & Growth

Despite the recent decline, Zen Technologies has delivered exceptional long-term returns, surging 534% in two years and 2,304% over the past five years. The stock reached a 52-week low of ₹795.10 on February 16, 2024, and a 52-week high of ₹2,627.95 on December 24, 2024.

From a technical perspective, the Relative Strength Index (RSI) stands at 23.9, indicating that the stock is in the oversold zone. It is currently trading below its 5-day, 10-day, 20-day, 50-day, 100-day, and 200-day moving averages. With a one-year beta of 1.1, the stock has shown high volatility.

Q3 Financial Highlights

• Net Profit: ₹39.72 crore, up from ₹30.58 crore in Q3 FY24 (30% YoY growth).
• Revenue: ₹152.21 crore, up 53% from ₹99.52 crore in the year-ago quarter.
• EBITDA: ₹66.24 crore, a 42% increase from ₹46.73 crore in Q3 FY24.
• EBITDA Margin: Declined to 38.01% from 45.04% in the previous fiscal.
• Order Book: Stood at ₹816.91 crore as of December 31, 2024.

Company Overview

Zen Technologies specializes in designing, developing, and manufacturing defense training systems using sensor and simulator technology. The company’s product range includes:

• Military training simulators for land-based operations.
• Driving simulators for defense and civilian use.
• Live range equipment for weapon training.
• Anti-Drone Systems (ZADS) for drone detection, classification, and neutralization.

The company also operates a training platform in Hyderabad, integrating its full range of products. Its ZADS system relies on passive surveillance, camera sensors, and jamming technologies to counter drone threats.

While the stock has witnessed profit-booking in recent sessions, analysts believe its strong fundamentals and robust order book position it well for future growth.