Zen Technologies shares surged nearly 8 percent to a lifetime high of Rs 2,033 after Nuvama Institutional Equities reiterated its 'Buy' rating on the stock, setting a target price of Rs 2,200. This implies an upside of 16.5 percent from the stock's previous close.
The brokerage's bullish stance followed Zen Tech signing a memorandum of understanding (MoU) with Florida-based AVT Simulation to penetrate the US defense market. The collaboration was announced during the National Training & Simulation Association's Interservice/Industry Training, Simulation, and Education Conference.
"This is strategically positive for Zen Tech, which shall expand its serviceable market (details awaited) for both simulation training and anti-drone segments while offering (Unmanned Aerial System) UAS-technology to AVT," Nuvama said.
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At 10:30 AM, shares of Zen Tech were trading 3 percent higher at Rs 1,943. The stock has delivered a staggering 147 percent gain year-to-date, far outpacing the Nifty 50's 14 percent rise during the same period. Notably, Zen Tech has been posting positive monthly returns for four months now.
Nuvama expects Zen Tech to achieve a 50 percent revenue CAGR, 35 percent operating profit margins, and 25 percent PAT margins over the next two to three years. The brokerage said that a pickup in order inflows in H2 FY25 is crucial to sustaining this trajectory.
"The US is currently one of the biggest markets for defence exports from India. However, we await further details on this partnership between Zen Tech and AVT Simulation to gauge the opportunity size," Nuvama added.
Also Read | Zen Tech shares soar on strategic pact with Florida-based simulation company
Zen Tech's Chairman and Managing Director Ashok Atluri said, "Through this partnership, AVT Simulation shall help Zen Tech break into the US defence market, and Zen Tech shall help AVT expand its international business."
Robert Abascal, Founder and Chief Strategic Officer of AVT Simulation, highlighted the importance of counter-UAS technology, calling it a 'big cost driver' in light of lessons learned from modern conflicts, including the war in Ukraine.
In Q2FY25, Zen Tech's profit surged 309 percent to Rs 62.6 crore, up from Rs 15.3 crore last year. Revenue grew 263 percent from Rs 66.5 crore to Rs 241.8 crore.
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