Zen Technologies Shares Plummet 30% Post Q3 Earnings: Analysts Adjust Targets Amid Order Delays

Zen Technologies Ltd. has encountered a significant blow to its stock value following the release of its Q3FY25 earnings, as shares plummeted by 30% in just two sessions. The company’s stock has experienced a steep drop of 60% in 2025, prompting concerns about its financial stability. Despite the challenges, Zen Technologies continues to be a major player in the defence sector.

Q3 Performance and Brokerage Adjustments

ICICI Securities, in its analysis of Zen Technologies' third-quarter performance, stated that the company's EBITDA for Q3FY25 amounted to Rs 443 million, aligning closely with its full-year FY25 projections. However, the brokerage pointed to persisting issues surrounding order inflow, a critical concern for the company's growth trajectory.

In light of these challenges, ICICI Securities lowered its target price for Zen Technologies to Rs 1,970, a reduction from its earlier target of Rs 2,535, citing uncertainties related to order inflows. The brokerage maintained its “Buy” rating on the stock but cautioned investors regarding the current environment.

“We have reduced our target multiple to 35x from 45x, and our new target price of Rs 1,970 is based on FY26/27E EPS,” ICICI Securities noted.

Stock Performance and Market Reaction

Zen Technologies’ shares experienced a dramatic decline on February 20, 2025, hitting a lower circuit limit of 10% at Rs 971.50, following a 20% fall on the previous day. The stock closed at this level, resulting in a significant market capitalization drop to Rs 8,758 crore on the BSE.

Despite this recent slump, Zen Technologies remains a multibagger stock with an impressive 312% rise over the past two years and an astronomical 1,669% increase in the past five years.

Concerns Over Order Inflow and Shipment Delays

Nuvama, another prominent brokerage, echoed similar concerns in its analysis of Zen Technologies' Q3 results. The firm noted a disappointing Q3FY25 order inflow for the third consecutive quarter, primarily attributed to delays in order finalizations by the Ministry of Defence (MoD). Consequently, Nuvama reduced its price target for the stock to Rs 1,650, down from Rs 2,200.

“While we are adjusting FY25E/26E/27E EPS estimates conservatively, we project a 38% revenue growth and a 33% increase in EPS from FY25 to FY27, assuming steady operational margins,” Nuvama analysts stated.

Despite these setbacks, Nuvama remains optimistic about the company’s future, citing the potential for long-term growth with a projected 33% compound annual growth rate (CAGR) in earnings.

Delayed Shipment and Profit Growth

Zen Technologies reported a 44.3% year-on-year (YoY) revenue increase for Q3FY25, though a 41.4% quarter-on-quarter (QoQ) decline was recorded, primarily due to a delay in a Rs 600 million shipment. The company’s full-year guidance of Rs 9 billion remains intact, however. Additionally, the company posted a 30% YoY rise in net profit for the December 2024 quarter.

Revised Outlook from Motilal Oswal

Motilal Oswal (MOFSL) joined the ranks of analysts revising their estimates for Zen Technologies, reducing their projections for FY25-27 by 4-22%. The brokerage lowered its target multiple and revised its target price to Rs 1,600, based on a 30x multiple of March 2027 earnings. Despite the revised targets, MOFSL maintains a “Buy” rating, citing strong prospects beyond FY26, particularly in large simulator orders, acquisitions, and new capabilities in anti-drone and simulator technologies.

“Execution challenges may persist in the short term due to delays in finalizing tenders, but we are confident in the company’s long-term potential,” MOFSL analysts said.

Technical Indicators and Stock Volatility

Zen Technologies' stock is currently grappling with high volatility, underscored by a Relative Strength Index (RSI) of 16.2, signaling that the stock is deeply oversold. The company’s stock is trading well below its key moving averages, including the 5-day, 10-day, 20-day, 30-day, 50-day, 100-day, and 200-day averages.

The stock reached a 52-week low of Rs 800 on February 21, 2024, and peaked at Rs 2,627.95 on December 24, 2024, highlighting significant fluctuations over the past year.

About Zen Technologies

Zen Technologies Ltd. is a leading provider of defence training systems, specializing in sensors and simulators technology. Its product offerings include land-based military training simulators, driving simulators, live range equipment, and anti-drone systems. 

The company operates a comprehensive training platform in Hyderabad, where it integrates its entire product range. Zen Technologies' Anti-Drone System (ZADS) is designed for drone detection, classification, tracking, and neutralization through passive surveillance and communication jamming technologies.

Despite the current volatility and challenges, Zen Technologies remains a key player in the defence technology space, and investors are closely watching the company’s ability to navigate the ongoing issues and deliver on its long-term potential.

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