Zen Technologies share price drops another 10% to hit 8-month low, down 60% in less than 2 months

Shares of Zen Technologies, a leader in defence simulation and anti-drone technology, declined for the third session today, February 8, recording a 10% drop to hit an 8-month low of ₹976 apiece.

In the previous trading session, the stock reached the 20% lower circuit limit as the company’s December quarter performance failed to excite investors. A drop in its order book and a fall in core profit margins dented investor sentiment, leading the once high-flying stock to touch multi-month lows.

Following the weak set of numbers, domestic brokerage firm ICICI Securities lowered its target price on the stock to ₹1970 apiece from the earlier target price of ₹2535 apiece, while maintain its ‘buy’ rating unchanged. 

The company’s revenue from operations during the December quarter (QFY25) stood at ₹152.21 crore, reflecting a 53% year-on-year (YoY) increase, while EBITDA rose to ₹66.24 crore from ₹46.73 crore. However, margins dropped to 38% from 45% in the same period last year, impacted by the sharp rise in operating expenses.

A significant jump in other income boosted the company’s profitability, as net profit jumped by 30% YoY to ₹39.72 crore, with profit margins declining to 22% in Q3FY25, compared to 29% in Q3FY24.

The order book moderated during the quarter, with the order book standing at ₹816 crore as of December, compared to ₹956 crore at the end of the second quarter. During Q3FY25, new orders worth ₹1.69 crore were secured, with ₹1.69 crore attributed to AMC, and no new equipment orders were received.

In the second quarter of the current fiscal year, the company secured new orders worth ₹668 crore, including ₹288 crore worth of Annual Maintenance Contracts (AMC), as per the company's earnings filing. 

Looking at the long term, the company is well-positioned amidst the rising defence spending by the Indian government. The Union Budget 2025 demonstrates the government’s commitment to strengthening the defence sector, with a record allocation of over ₹6.81 lakh crore for the Ministry of Defense, marking a 9.53% increase from FY25.

This includes a substantial ₹1.80 lakh crore earmarked under the capital budget for armed forces, providing significant tailwinds for the industry.

Meanwhile, the company announced strategic investments in two companies—Vector Technics Private Limited and Bhairav Robotics Private Limited. With these acquisitions, the company expands beyond combat training into advanced defence technologies, strengthening its ability to deliver integrated solutions for armed forces worldwide.

The company stated that these investments enhance its capabilities in UAV propulsion, autonomous robotics, and aerospace components, driving self-reliance in defense manufacturing. The acquisitions also position the company to compete globally, catering to international markets seeking cutting-edge, Indian-made defence solutions.

Stock corrects 60% in less than 2 months

The company’s shares have corrected by 60% in less than two months, falling from ₹2445 apiece to the current trading price of ₹972. Despite this sharp correction, the stock is still up by 315% over the last 2 years and 1700% over the last 5 years.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.