Zen Technologies: PAT growth of 124% & Revenue growth of 150% in H1-25 at PE of 75

100%+ growth in FY25 supported by a strong H1-25. Order book in place to support FY25 guidance. Revenue CAGR for FY25-27 at 50% to drive revenue to Rs 2,000 cr by FY27.

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1. Defence training & anti-drone solutions provider

zentechnologies.com |NSE: ZENTEC

2. FY20-24: PAT CAGR of 22% and Revenue CAGR of 31%

3. Strong FY24: PAT up 197% & Revenue up 101% YoY

4. Strong Q2-25: PAT up 310% & Revenue up 264% YoY

5. Strong H1-25: PAT up 124% & Revenue up 150% YoY

6. Business Metrics: Return Ratios improving strongly

7. Outlook: 100%+ revenue growth in FY25

i. FY25: Revenue growth of 100%+

Revenue to more than double from Rs 440 cr in FY24 to Rs 900cr+ in FY25

We are excited about the future and confident in meeting our guidance of ₹900 crores of turnover in the current financial year

ii. FY25-27: Revenue CAGR of 50%+

FY26: Rs 1350 cr

FY27: Rs 2000 cr

iii. Strong Order book: Oder book in place for Rs 900 cr revenue for FY25

Oder book to be replenished in Q3 and Q4 of FY25

8. PAT growth of 124% & Revenue growth of 150% in H1-25 at a PE of 75

9. Hold?

If I hold the stock then one may continue holding on to ZENTEC.

• Coverage of ZENTEC was initiated after Q1-24 results. The investment thesis has not changed after a strong FY24 followed by an equally strong H1-25.

• The outlook for ZENTEC is strong in FY25 with a guidance of 100%+ top-line growth on the back of a strong order book. H1-25 performance provides confidence in the ability of the management to deliver on its guidance.

• One needs to keep a watch on the margins expected to reduce from 43% in FY24 to 35% in FY25

• EBITDA margin at 35% for the current financial year, compared to the 43% margin it reported for the full year.

• PAT margin of 25% in FY25 compared to 28% in FY24

• One can continue to ride the business momentum in ZENTEC with management guiding for Rs 2,000 cr revenue till FY27.

• While the ZENTEC management is guiding for the order book is replenished in H2-25, yet one needs keep a watch on the order book as the entire thesis of Rs 2,000 cr revenue depends on the availability of the order book.

Will Be Getting Orderbook Replenishment In Q3FY25 And Q4FY25

10. Buy?

If I am looking to enter ZENTEC then

• ZENTEC has delivered PAT growth of 124% & Revenue growth of 150% in H1-25 at a PE of 75 which makes the valuations fully valued in the short term.

• ZENTEC is guiding for a revenue growth of 100% to reach Rs 900+ cr in FY25 from Rs 440 cr in FY24 at PE of 75 which makes the valuations fully priced for the FY25 expectations.

• ZENTEC is guiding for a FY25-27 revenue growth of 50% to reach Rs 2000 cr in FY27 from Rs 900+ cr in FY25 at PE of 75 which creates the opportunity in the longer term.

• The outlook for FY25-27 is dependent on long term execution and at PE of 75 the margin of safety in terms of valuations is limited.

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Previous coverage of ZENTEC

Zen Technologies: PAT growth of 63% & Revenue growth of 92% in Q1-25 at PE of 91

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