Defence stock Zen Technologies Ltd (Zen Tech) on Tuesday received a ‘Buy’ call from Antique Stock Broking, which initiated coverage with a target price of Rs 1,866, implying a potential upside of 31 per cent.
The rating comes amid a 25 per cent drop on the counter in the past one month.
While Zen Tech delivered impressive profit growth in recent years, near-term earnings visibility is clouded by delays in order finalisation, which may lead to a temporary pause in growth in FY26, the domestic brokerage said. Despite this, Antique believes the sizeable opportunity both in the Simulation and ADS segments should result in a rebound from FY27.
On Tuesday, the scrip edged 0.35 per cent higher to Rs 1,435.55. Zen Technologies is well-positioned to capitalise on the strong growth potential in the Anti-Drone Systems (ADS) space, Antique said adding that the defence company possesses in-house capabilities in core components of an effective ADS.
“It has an edge in both soft as well as hard-skill solutions. Recent conflicts have underscored the need for ADS to safeguard the country’s expansive borders (an estimated Rs 10,000 crore opportunity over next 5 years) and critical infrastructure such as airports and nuclear power plants,” Antique Stock Broking said.
Antique noted that Zen technologies holds a strong foothold in simulation-based training solutions for the armed forces. It projected Zen Tech to clock a consolidated revenue, Ebitda and profit CAGR of 29 per cent, 25 per cent and 26 per cent, respectively, over FY25-28.
“We initiate coverage on the stock with a ‘Buy’ rating, valuing it at 32 times its 1HFY28E EPS to arrive at a target price of Rs 1,866,” it said.
Antique said Zen Tech is well-capitalised with net cash at Rs 1,180 crore. Its asset-light manufacturing model and high profit margin drive robust return ratios in FY25.
“Given Zen’s domain leadership and growth potential in Simulation and ADS, we initiate coverage on the stock with BUY rating, valuing it at 32 times its 1HFY28E EPS to arrive at a target price of Rs 1,866,” Antique said.