Zen Tech shares plummet after Q3 results, losing over 50% in a month

Shares of Zen Technologies, an anti-drone technology and defence training solutions provider, declined 20% to hit its lower circuit limit of ₹1,079.35 in early trade on Monday after it registered sequential drop in its profitability. The small-cap defence stock has seen sharp correction in the recent past, losing over 50% in a month, while it plummeted 60% in two months as investors booked profit at higher levels.

Continuing its losing streak for the second straight session, Zen Technologies share price opened lower at ₹1,111.30, down 17.6% from Friday’s closing level of ₹1,349.15 on the BSE. Extending opening losses, the defence stock was locked in its 20% lower circuit limit at ₹1,079.35, while its market capitalisation slipped to ₹9,745.5 crore.

At the current level, Zen Tech shares are down 60% from its record high level of ₹2,627.95 which it touched on December 24, 2024. The counter has lost 56.5% year-to-date (YTD), while it slumped 36% in six months. Despite recent downtrend, the stock has delivered positive return of 34% in one year. The counter is up 36% from its 52-week low of ₹795.10 hit on February 16, 2024.

Zen Technologies released its December quarter earnings on February 15, posting 22% growth in net profit at ₹38.62 crore from ₹31.67 crore in the year-ago quarter, led by higher other income. On a sequential basis, net profit was down 40.8% from ₹65.24 crore in September quarter of FY25.

The revenue from operations rose 44% to ₹141.52 crore in Q3 FY25, from ₹98.08 crore in the same period last year. On quarter-on-quarter (QoQ), the revenue was down 41.44% from ₹241.69 crore in Q3 FY24.

At the operational level, Earnings before Interest, Tax, Depreciation and Amortisation (EBITDA) grew 21% YoY and dropped 33.18% to ₹58.69 crore in Q3 FY25. The margin declined to 35.90% from 47.34% in the year ago fiscal, while it improved from 35.12% on QoQ basis.

As of December 31, 2024, the order book stood at ₹816.91 crore, with healthy liquidity of ₹1,028 crores in bank balances.

“In this quarter, we experienced a rise in profitability due to higher other income; however, we remain confident that we will achieve our EBITDA target of 35% and PAT margins of 25% by the end of the financial year,” said Ashok Atluri, Chairman and Managing Director.

In a separate development, Zen Technologies last Saturday announced the acquisition of Applied Research International Private Limited (ARIPL) and ARI Labs Private Limited (ALPL), buying 100% equity stake in both companies. The acquisition, valued at ₹130 crore, will strengthen Zen Technologies’ commitment to advancing simulation technologies for defense and security forces, it said in the exchange filing.

ARIPL specialises in simulation and assessment tools for the marine, offshore, naval, ports & terminals, construction, and mining industries, along with e-governance solutions for the Directorate General of Shipping in India. On the other hand, ALPL focuses on simulation and assessment tools specifically for the marine and naval industries.

The 100% acquisition is expected to be completed in two tranches within the next one year subject to regulatory approvals and customary closing conditions, the release noted.

Last week, the company signed a strategic deal with TXT e-Tech and PACE, TXT Group, globally renowned leaders in aerospace and defense technology, during Aero India 2025 event in Bengaluru. This collaboration will enable Zen to expand its footprints into the sphere of aviation simulators in India and abroad, said Ashok Atluri.  

(DISCLAIMER: The views and opinions expressed by investment experts on fortuneindia.com are either their own or of their organisations, but not necessarily that of fortuneindia.com and its editorial team. Readers are advised to consult certified experts before taking investment decisions.)