Zen Technologies (533339) Q2 24/25 earnings summary

Executive summary

• H1 FY25 consolidated revenue reached ₹49,646 lakh, up from ₹43,985 lakh in H1 FY24, with net profit at ₹14,292 lakh, reflecting strong year-over-year growth and surpassing FY24 figures.

• Q2FY25 revenue from operations surged 277% YoY to ₹241.69 crore, with operational EBITDA up 265% to ₹79.42 crore and PAT rising 276% to ₹65.24 crore.

• Order book as of September 30, 2024, stands at ₹95,674 lakh, supporting future growth and revenue visibility.

• Completed a ₹1,000 crore QIP, oversubscribed five times, enhancing liquidity for R&D, acquisitions, and capital allocation.

• Focused on leadership in training/simulation and anti-drone systems, expanding into Navy, Air Force, and global markets, especially the U.S., with plans for local manufacturing.

Financial highlights

• H1 FY25 consolidated revenue: ₹496.46 crore (up 150% YoY); operational EBITDA: ₹191.35 crore (up 118% YoY); PAT: ₹139.48 crore (up 124% YoY, adjusted).

• Q2FY25 standalone revenue: ₹241.69 crore (up 277% YoY); operational EBITDA: ₹79.42 crore (up 265% YoY); PAT: ₹65.24 crore (up 276% 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.

• Cash and cash equivalents increased to ₹5,530 lakh as of September 30, 2024.

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.

• Strong order book and liquidity support future R&D investments, strategic acquisitions, and expansion into high-value systems.

• Export revenue and margins anticipated to rise in H2 FY25, with higher export order execution.

• U.S. market entry expected to contribute 10-50% of revenue by FY27, depending on order flow.