Shares of Zen Technologies Ltd have delivered multibagger returns in the long term. The defence sector stock has risen 958% in two years and gained 3,659% in five years. The stock which closed at Rs 193.90 on December 9 , 2022 was trading at Rs 2,050 in the current session. The multibagger stock managed to deliver 160% returns this year. The ongoing rally in Zen Technologies stock has pushed the valuations on the higher side with its PE rising to 83.97 compared to the sector PE of 50.56.
The stock also has a high price to book ratio of 38.35.
Brokerage Motilal Oswal has retained its buy call with a price target of Rs 2,400 on the stock.
Motilal Oswal expects a CAGR of 67%/63%/65% in revenue/EBITDA/PAT during FY24-27. This growth will be led by: 1) order inflow growth of 31%, due to a strong pipeline across simulators and anti-drones, 2) EBITDA margin of 38% for FY25, FY26 and FY27, and * 3) enhanced control over working capital due to improved collections.
"Recently, Zen has signed an MoU with AVT Simulation, which is into air simulation systems, and Zen intends to complement its ground simulation system portfolio through this MoU. Zen also expects improved traction in its recently launched products on remote-controlled weapon and battle surveillance systems. We maintain our estimates and roll forward to Dec, 26 earnings and arrive at a revised price target of Rs 2,400 based on 40x two-year forward earnings," said the defence and aerospace firm.
Another brokerage Nuvama has assigned a price target of Rs 2,200 and maintained its buy call on the stock.
"Zen Technologies (ZTL) has signed an MoU with Florida-based AVT Simulation (known for its air simulation systems) to break into the US defence market on the sidelines of National Training & Simulation Association’s Interservice/Industry Training, Simulation and Education Conference. This is strategically positive for ZTL, which shall expand its serviceable market (details awaited) for both simulation training and anti-drone segments while offering UAS-technology to AVT," said Nuvama.
"After a muted H1 in terms of ordering, OI pickup in H2FY25 remains one of the key ask-rates along with meeting its 50% revenue CAGR, 35% OPM and 25% PAT margin guidance over the next two–three years," added Nuvama.
Zen Technologies stock opened higher at Rs 2,075 on BSE today. It rose to a high of Rs 2090 on BSE. The stock hit a 52 week low of Rs 687.70 on January 24, 2024.
In the current session, total 0.18 lakh shares of the firm changed hands amounting to a turnover of Rs 3.76 crore. Market cap of the firm climbed to Rs 18,484 crore on BSE.
Nuvama's bullish stance comes after the firm said it was making a strategic push into the US defence market.
On Thursday last week, the company said, "The company has formalized its partnership with Applied Visual Technology Inc. D.B.A AVT Simulation, a premier provider of customized training systems, through a Memorandum of Understanding (MoU) inked today in Florida. This collaboration is set to revolutionize simulation and training solutions for defense and security forces," said Zen Technologies."
In terms of technicals, the relative strength index (RSI) of Zen Technologies stands at 68.6, signaling it's trading neither in the overbought nor in the oversold zone. Zen Technologies stock has a one-year beta of 1.1, indicating average volatility during the period. Zen Technologies shares are trading higher than the 5 day, 10 day, 20 day, 50 day, 100 day and 200 day moving averages.
Zen Technologies Limited designs, develops, and manufactures defence training systems, based on sensors and simulators technology. The company’s category of products includes land-based military training simulators, driving simulators, live range equipment and anti-drone systems. The company also has a training platform in Hyderabad, with an integration of its complete product range. Its Anti-Drone System (ZADS) system works on drone detection, classification and tracking on passive surveillance, camera sensors and neutralization of threat by jamming drone communication.