Defence Stock Zen Technologies: Targeting 50% CAGR Revenue growth and 35% EBITDA Margin

Zen Technologies Limited (ZTL) is a prominent developer, designer and supplier of computer-based training simulators and anti-drone systems. Its clientele includes the Ministry of Defence, police and paramilitary forces, various government departments and private entities. The company upholds high standards with ISO 9001:2008 (QMS) and ISO 27001:2005 (ISMS) certifications and is a recognised CMMI Level 3 organisation. Additionally, its research and development unit has received acknowledgement from the Department of Scientific and Industrial Research, Ministry of Science and Technology, Government of India.

Revenue Guidance 

For the financial year FY25, Zen Technologies has maintained its revenue guidance at ₹900 crore with a 35% EBITDA margin. The company is targeting a robust top-line growth, forecasting an average compound annual growth rate (CAGR) of 50% over the next 3 years. 

Strategic Acquisitions and Capital Management

Zen Technologies has recently executed Qualified Institutional Placements (QIP) to support acquisitions and meet working capital needs. While this has led to a dilution of the promoter’s stake, it has provided the necessary liquidity to pursue growth opportunities. Notably, the acquisition of a 51% stake in Vector Technics has brought in extraordinary intellectual property, with plans to export to North America. An order worth ₹800 crores is anticipated to be finalised by Q1FY26 or, at the latest, by Q2FY26.

Quarterly Financial Performance

The Q3FY25 results reflect substantial progress:

• Revenue: Increased to ₹141.52 crores from Rs.98.08 crores in Q3FY24, representing a 44% growth.
• EBITDA: Rose to ₹58.68 crores from ₹48.40 crores, with the margin reaching 35.90% of revenue—an improvement of 21% on a percentage basis.
• Profit After Tax: Grew to Rs.38.62 crores compared to ₹31.66 crores in Q3FY24, marking a 22% increase, despite a slight contraction in the profit margin (from 32% to 27%).
  Within the total revenue, ₹130.82 crores were generated from equipment sales, while the Annual Maintenance Contract (AMC) business contributed ₹10.70 crores.

Share Price Performance

The share price of Zen Technologies traded marginally higher by 0.02% as of 13:13 on 24 February 2025.

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