In addition to its core business, the order book has been strong for Zen's subsidiaries, and a combined revenue contribution of ~Rs 2.5 billion is expected for FY26 with a fairly strong profit profile.
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Motilal Oswal Report
Zen Technologies Ltd. posted weak numbersin Q2 FY26, with a miss on revenue but a beat on PAT due to higher-than-expected other income. Inflows in H1 FY26 remained weak; however, management expects inflows to revive in H2 due to the finalisation of the pending simulator order and improved tendering activity for anti-drone systems under the emergency procurement programs.
In addition to its core business, the order book has been strong for Zen's subsidiaries, and a combined revenue contribution of ~Rs 2.5 billion is expected for FY26 with a fairly strong profit profile. Zen is already building up capabilities to expand into marine simulators and eventually into air simulation, too.
To bake in its H1 FY26 performance, we cut our estimates for Zen by 25%/11%/ 12% for FY26/FY27/FY28. We also trim our target price to Rs 1,400 (from Rs 1,550), based on 30x Sep'27E EPS.
The stock is currently trading at a P/E of 62.1x/33.1x/25.1x on FY26/ FY27/ FY28E EPS.
Our estimates bake in a revenue/PAT CAGR of 18%/22% over FY25-28 with a strong Ebitda margin of 37% by FY28.
We reiterate our Neutral rating on the stock. We would look for order inflow announcements for further sustainability of revenue going forward
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