Zen Technologies Q1 Review - Strong Execution; Positioned To Capture A Healthy Market Share: Motilal Oswal

Motilal Oswal Report

Zen Technologies Ltd. reported 92%/56%/57% YoY increase in revenue/Ebitda/profit after tax in Q1 FY25, driven by an order book of Rs 11.6 billion. Ebitda margin remained strong at 40% as the company continued to benefit from backward integration and control over supply chain. As a result, profit after tax margin came in at 29.2%. Order inflows will start ramping up from H2 FY25 onward.

We marginally revise our estimates to factor in the Q1 performance and maintain Buy rating Zen with a target price of Rs 1,820, based on 40 times June-26E earnings per share (versus Rs 1,775 earlier).

The current valuation of Zen is still cheaper than that of other comparable companies in the private defense sector and Zen has the advantage of a faster CAGR, stronger margins and reasonable net working capital. Maintain Buy.

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