Synopsis: Zen Technologies shares slipped 6.54 percent after Q2FY26 results as revenue fell year-on-year, though profit improved sequentially. The company maintained steady earnings momentum supported by subsidiary performance and a strong consolidated order book of Rs. 675.04 crore.
A defence technology stock came under pressure after reporting mixed Q2FY26 earnings, with sequential improvement in profit but a sharp year-on-year decline in topline performance. While profitability remained resilient, margin contraction and muted revenue growth weighed on investor sentiment.
Zen Technologies Limited, with a market capitalisation of Rs. 12,008.62 crore, opened at Rs. 1,329.05 compared to the previous close of Rs. 1,397.05 and touched an intraday low of Rs. 1,305.60, marking a decline of 6.54 percent.
What’s the News?
The company announced its Q2FY26 results, reporting a steady sequential improvement in profitability despite lower revenue compared to last year.
Quarter-on-Quarter (QoQ): Revenue rose 10.1 percent to Rs. 174 crore from Rs. 158 crore in Q1FY26. Operating profit increased 1.6 percent to Rs. 65 crore from Rs. 64 crore, while operating profit margin declined from 41 percent to 37 percent. Profit before tax grew 9.2 percent to Rs. 83 crore from Rs. 76 crore, and net profit advanced 17 percent to Rs. 62 crore from Rs. 53 crore. Earnings per share improved to Rs. 6.58 from Rs. 5.29, up 24.4 percent quarter-on-quarter. EBITDA margin moderated from 54.67 percent to 51.88 percent.
Year-on-Year (YoY): Revenue declined 28.1 percent to Rs. 174 crore from Rs. 242 crore in Q2FY25. Operating profit decreased 18.8 percent to Rs. 65 crore from Rs. 80 crore, while operating margin expanded from 33 percent to 37 percent, reflecting better cost efficiency. Profit before tax was marginally higher at Rs. 83 crore versus Rs. 82 crore, up 1.2 percent year-on-year. Net profit stood at Rs. 62 crore compared to Rs. 63 crore, down 1.6 percent, while EPS declined from Rs. 6.94 to Rs. 6.58, a fall of 5.2 percent. EBITDA margin, however, improved sharply to 51.88 percent from 36.58 percent.
The Net Profit of Rs. 62 crore in Q2FY26 included Rs. 26 Crore worth of other income, compared to only Rs. 8 crore last year during the same period.
Comments from Management
Commenting on the results, Mr. Ashok Atluri – Chairman and Managing Director, said:
“During the quarter, we reported lower turnover compared to the same period last year. Despite this, operational EBITDA margins remained healthy, demonstrating our ability to sustain profitability even amid temporary fluctuations in revenue. Contributions from subsidiaries, particularly Applied Research International Private Limited (ARIPL) and Unistring Tech Solutions (UTS), continued to reflect the success of Zen’s strategic investments. Looking ahead, we expect stronger subsidiary contributions as execution scales up and synergies are fully realised.”
“Zen’s financial position remains robust with liquidity of over Rs. 1,100 crore as of September 30, 2025. The Company continues to prioritise R&D investments to deepen its technological edge and expand its product portfolio.”
“In the aftermath of Operation Sindoor, the Government of India initiated a series of emergency procurement measures to address immediate operational requirements. As a result, the closure timelines for certain regular Requests for Proposals (RFPs) have been temporarily delayed. This development is procedural in nature and does not impact the underlying demand or long-term revenue visibility. The deferred orders remain active within the procurement system and are expected to be released in due course. At the same time, Operation Sindoor provided real-world validation of Zen’s operational equipment, following which the Company is experiencing increased interest, particularly for its anti-drone systems.
We remain confident that the temporary headwinds being witnessed in FY26 will give way to a stronger performance in the years ahead, driven by our continued focus on innovation, disciplined execution and the expanding opportunities in India’s defence modernisation programme.”
Operational Highlights
Zen Technologies strengthened its position in India’s defence technology ecosystem during the quarter by completing four strategic acquisitions across robotics, drones, naval systems, and loitering munitions. The acquisitions of Applied Research International, Bhairav Robotics, Vector Technics, and TISA Aerospace collectively expand the company’s presence beyond simulation into high-growth, technology-intensive segments.
These deals add new digital, SaaS, and annuity-based revenue streams while providing over 121 proprietary IP assets, ready prototypes, and R&D synergies that accelerate product development by nearly two years. The acquisitions also enhance cross-selling opportunities across defence clients, reduce import dependency in UAV propulsion systems, and position Zen as a full-spectrum defence technology provider covering land, naval, and aerial combat systems.
As of September 30, 2025, Zen Technologies reported a consolidated order book of Rs. 675.04 crore, which includes Rs. 190.53 crore related to subsidiary companies. The domestic order book stood at Rs. 554.12 crore, while international orders were valued at Rs. 120.92 crore.
About the Company
Zen Technologies Limited is a pioneer in developing and delivering state-of-the-art defence training and anti-drone solutions. The company has an established track record in building advanced systems used for defence training and measuring the combat readiness of security forces. Headquartered in Hyderabad, it operates a dedicated R&D and manufacturing facility recognised by the Ministry of Science and Technology, Government of India. Zen has applied for over 180 patents and has supplied more than 1,000 training systems worldwide.
-Manan Gangwar
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Inshorts: Zen Technologies shares fell 6.54 percent to Rs. 1,305.60 after Q2FY26 results. Revenue grew 10.1 percent quarter-on-quarter but declined 28.1 percent year-on-year, while net profit rose 17 percent sequentially and fell 1.6 percent annually to Rs. 62 crore. The company reported an order book of Rs. 675.04 crore, including Rs. 190.53 crore from subsidiaries.
