Shares of a small-cap defence stock surged 10 percent to hit the upper circuit on Monday’s early trades after the company reported stellar results for the April to June quarter (Q1FY24). Its shares were locked at ₹ 674.85 apiece on the National Stock Exchange (NSE).
Zen Technologies is a leading provider of defence training solutions and drone and anti-drone solutions with an impeccable track record in building training systems for imparting defence training and measuring combat readiness of security forces, for more than three decades.
According to an exchange filing, the Hyderabad-based company set a new record in terms of revenue and profitability, driven by the successful execution of a significant part of the simulation export and domestic anti-drone orders.
It secured new orders amounting to approximately ₹ 202 crores in the first quarter. Moreover, it bagged orders worth ₹ 500 crores in July 2023, bringing its cumulative order book position to ₹ 1,000 crores. This number exceeds the cumulative turnover of the last decade.
Mr Ashok Atluri Chairman and Managing Director of the company said that it is a black swan event resulting from the convergence of various factors such as #MakeInIndia, #Atmanirbharata, Buy Indian IDDM, Defence Positive Lists, Simulation Framework, and the GoI’s Sustainability Commitment.
He further added that owing to escalating geopolitical risks and India’s improved international relations, the company is optimistic about making significant inroads in the export markets, especially for simulators and anti-drone systems.
The company reported a 474 percent increase in its profit after tax to ₹ 47.13 crores in Q1FY24, as compared to ₹ 8.21 crores in the corresponding quarter last year (Q1FY23). Moreover, its revenue from operations jumped 299 percent to ₹ 132.45 crores in Q1FY24, when compared with ₹ 33.23 crores in Q1FY23.
Zen Technologies’ share price increased by 57 percent in the past month. Moreover, in the past six months, it has delivered multibagger returns of a whopping 235.25 percent, as its share price increased from ₹ 201.30 to the current level of ₹ 674.85 apiece. Therefore, if an investor had invested ₹ 1 lakh in the company’s shares six months ago, the value of their holdings would have been ₹ 3.35 lakhs today!
With a market capitalization of ₹ 5,127 crores, Zen Technologies is a small-cap company. It has a return on equity of 14.27 percent and an ideal debt-to-equity ratio of 0.02. Its shares were trading at a price-to-earnings ratio (P/E) of 118.98, which is significantly higher than the industry P/E of 23.74, indicating that the stock might be overvalued as compared to its peers.
The company’s promoters hold a 57.45 percent stake in it, followed by retail investors with 39.08 percent and foreign institutions with 3.47 percent. Among ace investors, Mukul Agrawal holds 11,26,765 shares or a 1.34 percent stake in the company.
Written by Simran Bafna
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