Nomura has initiated coverage on Zen Technologies (ZTL) with a “Buy” rating and a target price of ₹2,200, citing the company’s position as one of the few critical suppliers of defence simulators enhancing armed forces’ capabilities. Nomura highlights ZTL’s strong in-house intellectual property (with over 75 patents) and advanced anti-drone systems as key growth drivers.
The brokerage firm forecasts robust financial performance, expecting a 36%-plus order intake (OI) compound annual growth rate (CAGR) between FY24 and FY27, along with 33–35% operating profit margins (OPM) and an earnings per share (EPS) CAGR of over 54%. Nomura values ZTL at 40x price-to-earnings (PE) on an estimated FY27 EPS of ₹55.
Recently, ZTL completed a ₹10 billion Qualified Institutional Placement (QIP) aimed at supporting organic and inorganic growth, while optimizing working capital. With expectations of ~60%-plus revenue CAGR and ~35% OPM over the next two to three years, Nomura believes these targets are achievable due to ZTL’s competitive positioning in high-growth defence sub-segments and strong market presence.
Key business catalysts include government initiatives like the 2021 simulator framework for armed forces, the Agnipath Scheme of 2022, a preference for indigenous defence manufacturing (IDDM), export opportunities, and the growing demand for anti-drone systems to counter UAV threats.
