Shares of Zen Technologies Ltd. have experienced a significant downturn, falling 11% over four consecutive trading sessions. This dip follows the defence electronics manufacturer's announcement of a sharp decline in its March quarter performance for consolidated revenue and EBITDA.
Q4 Performance Dips, Analysts Remain Bullish
Zen Technologies reported a 45.2% year-on-year drop in consolidated revenue and a 63% fall in EBITDA for the March quarter. The company's EBITDA margin also contracted significantly by 1,382 basis points, settling at 28.6%. This contraction was primarily attributed to lower output and additional operational expenses incurred during the quarter.
Despite these challenging quarterly results, prominent brokerage firms Antique Stock Broking and Elara Securities have maintained their 'Buy' ratings on the stock. They point to several positive indicators that suggest a rebound in the company’s fortunes.
Strong Order Book and Future Outlook
Antique Stock Broking highlighted a meaningful strengthening of order inflows in the second half of FY26. Zen Technologies' consolidated order book expanded by 50% year-on-year, reaching an impressive Rs 1,330 crore. The company's management expressed optimism about securing several large orders in the current quarter, which is expected to further enhance revenue visibility.
Based on the current order book and anticipated inflows, Zen Technologies is targeting Rs 1,000 crore in revenue for FY27, a goal Antique Stock Broking believes is achievable. "Following a decline in FY26E, we expect earnings to rebound in FY27E, supported by execution of the expanded order book," Antique stated, reiterating its 'Buy' rating with a revised target price of Rs 1,700.
Elara Securities Sees Growth Potential
Elara Securities also maintained its 'Buy' rating, albeit with a slightly lowered target price of Rs 1,870. The firm adjusted its FY27 earnings estimates by 16% due to lower-than-expected closing order book figures, primarily from delayed inflows. However, Elara remains confident in Zen Technologies' long-term prospects.
Elara emphasized that a successful demonstration of Zen Technologies' product portfolio, which includes simulators, drones, and counter-drone systems, would significantly drive demand both domestically and for exports. The brokerage also noted India's 18% year-on-year jump in the defence budget as a positive catalyst for the sector. Elara projects an earnings CAGR of 45% for Zen Technologies during FY26-29E, with average Return on Equity (ROE) and Return on Capital Employed (ROCE) of 20% each over FY27-29E.