ZEN Technologies - Research Report

Zen Technologies Limited is a pioneer and leader in providing world class state‐of‐the‐ art Defence Training Solutions, Drones and Anti‐ Drones solutions and has a proven and impeccable track record in building training systems for imparting Defence training and measuring combat readiness of security forces. It was the first company in India to commercialize PC-based visual simulation technology for small arms training simulators. It is currently engaged in indigenous design, development and manufacture of sensors and simulators technology based defence training systems and provides Defence Training Solutions and seamless services to Ministry of Defence (Armed Forces), Security Forces Police, Para‐military forces since over three decades.

The company manufactures land based military training simulators, driving simulators, Live range equipment and Anti drone Systems. With a dedicated R&D (recognized by the Ministry of Science and Technology, Government of India) and production facility in Hyderabad, the company has applied for over 150+ patents and shipped more than 1,000 training systems around the world.

So far the has supplied over 170 simulators to over 70 customers all over India and enjoys the confidence of this large customer base. The main customers are, Defense Services, State Police forces, Para Military forces and the Navy of a South East Asian country. The company's products are Small Arms Training Simulator (Zen SATS SL), Hand Grenade Simulator (Zen HE36S), Advanced Weapons Simulator (Zen AWeSim), Tactical Engagement Simulator (Zen TacSim), 81mm Mortar Simulator, Driving Training Simulator (Zen DTS), Zen Bus Simulator, BMP II Driving Simulator (ZEN BMP-II DS) and Anti-Tank Guided Missile Simulator (Zen ATGM Sim).

As of December 2023, company’s total orderbook stands at 1,434.38 Cr. which includes order book of Rs. 1403.4 Cr. as of October, 2023 and newly bagged orders worth Rs. 129.08 Cr. Company has bagged Rs. 640.37 Cr. of Domestic orders and 159.78 Cr. of Export orders under its Training Simulators and Equipment segment and 356. 86 Cr. Domestic orders and 277.37 Cr. of Export Orders under its Anti Drone Systems segment out of the total outstanding order book.

 

Fundamentals (FY23-24):

CMP	Rs. 903
52 - week high	Rs. 999
52 – week low	Rs. 256.90
Dividend % (consolidated)	0.02 %
ROE	17.7 %
BVPS (Rs.)	32.13
Sales (Rs.) (Q3FY24)	99 cr.
Debt to Equity	0.02
P/E ratio	60.88
EPS (consolidated)	5.39
P/B ratio	10.79
Market Cap	7,276 Cr.
Face value	Rs. 1

 

Financial Results:

Company’s Net Sales was at Rs 99.52 crore in December 2023 up 89.6%, Quarterly Net Profit was at Rs. 30.58 crore in December 2023 up 224.08% and EBITDA stands at Rs. 46.73 crore in December 2023 up 150.43% as compared to December 2022. Company’s EPS has increased to Rs. 3.67 in December 2023 from Rs. 1.19 in December 2022.

 

Key Updates:

1. Zen Technologies Limited, secures an order worth ₹93 Cr from Ministry of Defence, Govt of India in the space of Tactical Training  
2. The company recently received its 15^th Patent Grant of Fy23-24 in India for its revolutionary "LASER TRANSMITTER UNIT. In the same fiscal year, the company has received Patents for a range of cutting-edge technologies, including the Smart Target System (STS), Indoor Tracking System, Grenade Simulator, Construction of Spherical Screens, ACTS, Sensor Weapon, Total Containment Trap (TCT), ZU-23 Simulator, MRTS, MMG Simulator, and an 'ILU Holder.'
3. Recently the company signed MOU with Government of Goa to set up a new state-of the-art Research and Development (R&D) and manufacturing facility in Goa, India. This new facility will be set up at the Electronic Manufacturing Cluster (EMC) Tuem, Goa at an investment of up to ₹50 crores and is expected to create employment opportunities for approximately 800 individuals.
4. Recently the company been awarded an order valued at approximately ₹100 Cr (inclusive of taxes) by the Ministry of Defence, India, for its state-ofthe-art Force-On-Force Tank training system. This innovative system empowers Tank Units and Sub-Units to engage in training on real terrains under authentic conditions using their equipment, without the necessity for live ammunition.
5. The company bagged an order from the Ministry of Defence, Government of Indi valued at approximately ₹227.65 crores which includes the domestic order for the supply of Anti-Drone systems along with Comprehensive Maintenance Contract (CMC) post-warranty, at a cost of ₹43.22 crores.
6. In recent period, the company has bagged many orders from MoD, GOI valued at Rs. 123.3 crore, Rs. 72.29 crore and Rs. 64.97 crores respectively.
7. Marking strides in exports the company has also bagged a significant order which are valued at approximately ₹ 340 crores (~ 41.5 million USD), Rs. 202 crores and Rs. 160 crores under the Government's Indigenous Design and Development (IDDM) initiative, which requires Indian IP and over 60% indigenous content and all three orders from different entities.
8. The J&K Police has also awarded Zen Technologies a contract worth ₹5.28 crore to supply Zen ShootEdge® Systems (Corner Shot Weapon Systems) marking it to be company’s first order for ShootEdge®.
9. Zen Technologies Limited has also received a PSO from the Indian Army for design and development of prototype of Integrated Air Defence Combat Simulator (IADCS). On completion of UTRR, an order towards procurement of 16 no’s of IADCS will be issued by the Indian Army for submission of their commercial offer prior to commencement of Field Evaluation Trials.
10. Unistring Tech Solutions Private Limited (UTS), a subsidiary of Zen Technologies Limited, has secured an order worth ₹61 Crores from an Indian defence PSU.
11. Zen Technologies Limited has also signed an export contract worth ₹35 Crores with one of its important Middle East customers which includes Live Simulation equipment worth ₹19.7 Cr and O&M worth ₹15.4 Cr for 4 years.
12. The company also secured an order of ₹ 155 crore from Indian Air Force (IAF) for the supply of Counter Unmanned Aircraft Systems (CUAS).

In last 3 Years the stock gave a return of 925.28% as compared to the rise of Sensex and Nifty in the same period.

Ministry of Defence (MoD) has promulgated the framework for increased utilization of simulators by the Indian Army, Indian Airforce, Indian Navy, and the Indian Coast Guard to transform to simulation-based training across all military domains to achieve cost-effective, safe and smart training. The framework emphasizes indigenous design and development as well as outsourcing simulator operation and maintenance to Indian Companies. The policy will apply to all types of simulators currently in use or to be purchased by the Armed Forces in the future and due to this policy Zen Technologies will be benefited a lot and may enjoy heavy order inflow in upcoming years. In recent years the demand for Anti Drone Systems has been increasing considering the threat from Drone attacks and GOI and as well as government of other countries have been spending high to enhance and strengthen their anti-drone security systems. Mutual Fund Holding in the company increased by 0.04% in the last quarter to 0.04 and its Annual Net Profit rose 2,052.95% in the last year to ₹42.74 Cr. while its sector's average net profit growth for the last fiscal year was 3.06%. Considering the order book position in export as well as domestic markets, market leader in simulation and training equipments, preferred company for simulation systems and Anti drone systems by MoD and financial positions of the company, investors can invest in this company for long term period.

 

HET ZAVERI

info@smartinvestment.in

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