Zen Technologies Soars 4% as Motilal Oswal Predicts 31% Upside, 73% YTD Rally

Zen Technologies share price surged nearly 4% on Thursday following a bullish rating from brokerage firm Motilal Oswal. This small-cap stock has already delivered over 127% returns in the past year and gained more than 72% year-to-date (YTD).

Motilal Oswal Financial Services initiated coverage on Zen Technologies with a ‘Buy’ rating and set a target price of ₹1,775 per share. This target suggests a potential upside of over 31% from Tuesday’s closing price.

Zen Technologies is a key player in the defense simulator-based training market and has also entered the counter-drone market. The markets for simulators and counter-drones in India are estimated at ₹14,000 crore and ₹12,000 crore, respectively, over the next five years.

The company holds a strong market share in both segments, with just 2-3 competitors in defense simulators and 5-6 in counter-drones.

With a robust order book of ₹1,400 crore and expected order inflow growth of 37% over the next three years, Motilal Oswal predicts Zen Technologies’ revenue, EBITDA, and PAT to grow at a CAGR of 63%, 57%, and 56% over FY24-27.

“This growth will be driven by strong order inflows, high EBITDA margins, and better control over working capital. We expect Zen Technologies’ RoE and RoCE to reach 38% by FY27,” Motilal Oswal said.

Key Drivers:

• Strong industry growth prospects.
• Well-positioned simulator portfolio.
• Fully integrated counter-drone portfolio.
• High EBITDA margins due to competitive positioning.
• Healthy revenue visibility from current order book.
• Asset-light model with strong RoE and RoCE potential.
• Growing AMC business.

Risks:

• Possible slowdown in defense industry procurement.
• Foreign currency risks.
• High working capital needs.

At 12:35 pm, Zen Technologies shares were trading 1.65% higher at ₹1,374.60 apiece on the BSE.