Zen Technologies (533339) Q2 24/25 earnings summary

Executive summary

• H1 FY25 revenue reached INR 496.46 crore, up 150% YoY, with PAT at INR 139.48 crore, surpassing FY24 figures and reflecting robust growth momentum.

• Order book as of September 30, 2024, stands at INR 956.74 crore, supporting future growth, with a robust pipeline of INR 3,500 crore and expectations of INR 1,200 crore in new orders by year-end.

• Completed INR 1,000 crore QIP, oversubscribed five times, significantly strengthening liquidity and attracting marquee investors.

• Focused on leadership in training/simulation and anti-drone systems, with significant R&D investments, AI-enabled solutions, and expansion into Navy, Air Force, and global markets, especially the U.S.

• Strong cash reserves of ~INR 1,103 crore enable continued R&D investment, acquisitions, and operational flexibility.

Financial highlights

• H1 FY25 consolidated revenue: INR 496.46 crore (up 150% YoY); operational EBITDA: INR 191.35 crore (up 118% YoY); PAT: INR 139.48 crore (up 124% YoY); operational EBITDA margin at 38.54%.

• Q2FY25 consolidated revenue: INR 241.84 crore (up 264% YoY); operational EBITDA: INR 80.00 crore (up 322% YoY); PAT: INR 62.67 crore (up 310% YoY).

• Gross margin for H1 FY25 was 50%, impacted by higher R&D allocation and product/geography mix, but operational leverage helped maintain profitability.

• Working capital cycle increased to 200 days in H1 FY25 due to higher receivables, expected to normalize by year-end.

• Basic and diluted EPS for H1 FY25 were INR 16.42, up from previous year.

Outlook and guidance

• FY25 revenue expected to exceed INR 900 crore, with management confident of maintaining 50% CAGR over the next three years, not factoring in potential acquisitions.

• Export revenue and margins anticipated to rise in H2 FY25, with higher export order execution and U.S. market entry expected to contribute 10-50% of revenue by FY27.

• Order book remains robust at INR 956.74 crore, supporting future revenue visibility.

• Actively evaluating acquisition opportunities in simulator and electronic warfare technologies.

• Focused on organic and inorganic growth, innovation, and capitalizing on global military modernization demand.