Zen Technologies Share Price Analysis: Recent Performance and Future Outlook

Zen Technologies, a company specializing in drone manufacturing and defense solutions, has recently experienced significant volatility in its share price. This article provides an overview of the company’s recent stock performance, key financial results, and future prospects, based on available reports and analyses.

Recent Stock Performance

Zen Technologies’ share price has seen considerable fluctuations. Recently, the stock experienced a sharp correction, with a notable three-day fall. For instance, one report indicated a 33% correction in just three days. On Monday, February 17, shares hit a 20% lower circuit, marking the stock’s steepest decline since March 12, 2020.

In early trade on Monday, one report noted a plunge of over 17% after the company reported its Q3 results. Specifically, shares declined as much as 17.62% to ₹1,111.30 on the BSE. Another instance showed the shares trading at Rs 976.90 on the NSE.

Q3 FY25 Financial Results

Zen Technologies’ Q3 FY25 results have been a focal point for investors. The company reported a net profit of ₹38.62 crore, which represents a 22% increase from ₹31.67 crore in the same quarter the previous year. This growth was primarily driven by higher other income. However, when compared to the previous quarter, the net profit nearly halved from ₹65.24 crore.

Revenue grew 44% year-on-year to ₹141.52 crore, up from ₹98.08 crore. Yet, this figure represents a 41.44% decline from ₹241.69 crore in the September quarter, attributed to delays in shipments and a shift in revenue booking to the fourth quarter.

Earnings Before Interest, Tax, Depreciation, and Amortization (EBITDA) also saw changes. EBITDA grew 21% year-on-year to ₹58.69 crore from ₹48.41 crore. However, it decreased 33.18% from ₹87.84 crore quarter-on-quarter. EBITDA margins weakened to 35.90% from 47.34% year-on-year but improved slightly from 35.12% quarter-on-quarter.

Management Commentary

Ashok Atluri, Chairman and Managing Director of Zen Technologies, commented on the results, stating that the company experienced a rise in profitability due to higher other income. He expressed confidence in achieving the EBITDA target of 35% and PAT margins of 25% by the end of the financial year. Atluri also highlighted a robust order book of ₹816.91 crores as of December 2024, indicating a healthy pipeline for the coming quarters.

Strategic Investments and Expansion

Zen Technologies has been actively pursuing strategic investments to enhance its capabilities. On February 15, the company announced investments in Vector Technics Private Ltd and Bhairav Robotics Private Ltd. These investments are aimed at enhancing Zen’s capabilities in UAV propulsion, autonomous robotics, and aerospace components.

The acquisition of a 51% controlling stake in Vector Technics is expected to enable Zen to expand into aerospace components and reinforce its role in supporting global drone and robotics industries. Additionally, the acquisition of a 45.33% stake in Bhairav Robotics is set to strengthen Zen’s position in the defense robotics and autonomous systems segment.

Analyst Perspectives

Brokerage firms have offered varied perspectives on Zen Technologies. Motilal Oswal Financial Services (MOFSL) pointed to Zen Tech’s underperformance compared to broader indices, citing concerns related to growth visibility, order inflows, and acquisition plans. MOFSL revised its earnings estimates downward by 4%, 25%, and 22% for FY25, FY26, and FY27, respectively, also reducing its target multiple for Zen Tech.

However, other brokerage firms like Motilal Oswal, ICICI Securities, and Nuvama have ‘Buy’ ratings on the counter, with target prices ranging from ₹2200 to ₹2535 per piece.

Future Outlook

Looking ahead, Zen Technologies anticipates inflows of ₹800 crore to materialize during Q4-FY26, providing revenue visibility beyond FY25. The company maintains its revenue guidance of Rs 900 crore for FY25, with an EBITDA margin target of 35 percent.

MOFSL expects a rebound in overall ordering beyond FY26, driven by large-sized simulator orders, recent acquisitions, and MoUs, as the company expands its capabilities in simulators, anti-drone technology, and other new areas. However, delays in the finalization of tenders may continue to affect execution in the near to medium term.

Technical Analysis

From a technical standpoint, the relative strength index (RSI) of Zen Technologies stood at 23.9, signaling it’s trading in the oversold zone, which implies that the stock may rebound. Zen Technologies stock has a one-year beta of 1.1, indicating high volatility during the same period. The shares are trading lower than the 5 day, 10 day, 20 day, 50 day, 100 day and 200 day moving averages.