SENSEX NIFTY
Jan 01, 1970, 05.29 AM IST | Source: CNBC-TV18

Zen Tech top pick in small & midcap space

Hemindra Hazari of Karvy Stock Broking is of the view that Zen Technologies is the top pick in small and midcap space. Simulators are going to be important part and the company would be the prime beneficiaries.

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Hemindra Hazari of Karvy Stock Broking is of the view that Zen Technologies is the top pick in small and midcap space. Simulators are going to be important part and the company would be the prime beneficiaries.

Hazari told CNBC-TV18, Zen Technologies at the moment is our top pick in small and midcap space. It is engaged in defense related activities. Essentially it makes simulators both for the military and the para military forces. The stock has taken a severe knock and at these levels it is very attractive at about 9 times FY07 earnings. We are expecting the EPS growth of about 60% in 07 and another 50% in 08. The kinds of products they are going to come up with are going to be impressive. They already have a tie up with SAAB and we expect one of the simulators that they are going to be in production this year.

Further he added, We also see that they have a simulator on the driving training school and that also we expect to do well. On the broader front we are quite positive on this defense sector space because we believe that with the rising insurgency in India specially from the naxalite movement which is coming right from Nepal down to Andhra Pradesh and even parts of Maharashtra. There is going to be increasing focus on para military forces on upgrading their technology as well as their training. In that regard simulators are going to be a very important part and companies like Zen Technologies would be the prime beneficiaries.

Disclosure: I do not have holdings in the above stock.

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