Zen Technologies (533339) Q3 24/25 earnings summary

Executive summary

• Revenue and profit growth remained strong in Q3 FY25 and the nine months ended December 2024, with management reaffirming confidence in achieving the INR 900 crore annual revenue target despite some order delays.

• Benefited from government’s increased defence budget, supporting sector growth.

• Recent acquisitions, including ARI (naval/marine simulation), Vector Technics (drone technology), Bhairav Robotics, and ARI Labs, are expected to create significant synergies and expand the addressable market.

• Completed assembly unit expansion at Maheshwaram, enhancing operational scalability.

• Order book as of December 31, 2024, stood at approximately ₹81,691 lakhs, reflecting strong demand in Defence and Homeland.

Financial highlights

• Q3 FY25 consolidated revenue rose 53% YoY to ₹152.21 crore; standalone revenue up 44% YoY to ₹141.52 crore; EBITDA was ₹58.68 crore (35.9% margin), up 21%; PAT was ₹38.62 crore, up 22%.

• For the nine months ended December 2024, consolidated revenue was ₹648.67 crore (up 117%), EBITDA ₹269.17 crore, and PAT ₹179.20 crore; standalone revenue was ₹637.17 crore (up 116%), EBITDA ₹252.77 crore (37.7% margin), and PAT ₹178.03 crore (up 85%).

• AMC business contributed ₹10.7 crore in Q3; equipment sales were ₹130.82 crore.

• Basic and diluted EPS for Q3 FY25 were ₹4.42, up from ₹3.67 in Q3 FY24.

• Other income increased due to interest from funds raised in August 2024, impacting EBITDA margins.

Outlook and guidance

• Management maintains FY25 revenue guidance of INR 900 crore, with any shortfall in FY26 expected to be offset by strong growth in FY27 and FY28.

• Average CAGR of 50% is targeted over the next three years, with optimism for both domestic and export markets.

• FY26 revenue guidance may be revised as order inflows clarify, but long-term growth trajectory remains intact.

• Targeting EBITDA margin of 35% and PAT margin of 25% by year-end.

• Robust order book and strategic focus on new contracts and portfolio diversification support sustained growth.