Zen Technologies, headquartered in Hyderabad, designs and manufactures combat training solutions and counter-drone systems for the armed forces, paramilitary and state police. It describes itself as India’s largest supplier of simulation training equipment and anti-drone systems, with 1,000+ solutions deployed, 200+ patents filed globally and about 90% of revenue from repeat customers (company website). The Atluri family promotes the company; Ashok Atluri is Chairman and Managing Director.

Management now frames Zen as a defence company with five capabilities: training simulation and systems, counter-drone solutions, automated weapon stations (RCWS), combat robotics and drones. Beyond the standalone business, the group includes subsidiaries Unistring Tech Solutions, Arisense and Bhairav Robotics, which contributed to FY26 consolidated earnings.

Zen also raised roughly ₹1,000 Cr of equity in FY25 (financing cash flow ₹1,007 Cr), which is why reserves jumped from ₹440 Cr to ₹1,692 Cr and why treasury income now forms a material slice of profit. Management is targeting North America and Europe and has said it is actively looking at acquisitions.

Revenue compounded at 66% over five years, and profit at 128%, from a very small FY21–22 base. The pattern that matters is lumpiness: FY25 was a peak year (₹974 Cr revenue, ₹299 Cr profit) and FY26 fell 29% on delayed order conversion. All figures are consolidated, ₹ Cr.

Last five quarters

Net profit here is as compiled by Screener. Zen’s own Q1 FY27 presentation shows PAT of ₹34.5 Cr (₹37 Cr excluding the ₹3.4 Cr fire loss); the difference may reflect how minority interest and one-off items are treated by different data providers.

Balance sheet, cash conversion and returns

Analyst read. Three points stand out. First, return ratios have compressed sharply (ROCE 46% in FY24 to 16% in FY26; ROE 10.7% last year) partly because the enlarged equity base carries a large cash balance. Second, other income of ₹80 Cr over the trailing year is roughly 30% of pre-tax profit, so earnings quality is lower than the headline margin suggests. Third, working capital is heavy: management cites a 257-day cycle at 30 Jun 2026 (Screener’s method shows 543 days), so every rupee of growth ties up cash, which is why free cash flow was negative in FY24–25.

Q1 FY27. Revenue from operations was ₹141.6 Cr (down 10.5% year on year and 20.5% quarter on quarter). Operational EBITDA was ₹38.7 Cr at a 27.3% margin versus 40.9% a year ago, though the base quarter included a one-off provision reversal. Management attributes the shortfall to execution timing, since much of the order book was won from October 2025 with roughly 12-month delivery cycles.

We use the standing Zumedha framework: ten years of free cash flow to the firm, discounted at 12%, with 5% terminal growth. Operating cash flows exclude treasury income; the ₹1,217 Cr cash pile is added back separately as net cash of about ₹1,198 Cr after ₹19 Cr of debt. Minority interest in subsidiaries is deducted at 8% of operating enterprise value.

Base-case assumptions: revenue growth of 24%, 35%, 26%, 21% and 17% over FY27–31 fading to 8% by FY36; EBITDA margin of 30% in FY27, 33% in FY28 and 34% thereafter (below management’s 35% target); D&A 4% and capex 5% of sales; tax 26%; incremental working capital at 30% of incremental revenue. FY27E revenue of ₹853 Cr implies about ₹236 Cr per quarter for Q2–Q4, against ₹142 Cr in Q1.

Sensitivity: WACC versus terminal growth (base case, ₹ per share)

Scenario and reverse-DCF checks

Analyst read. Even the full management guidance path, sustained for a decade at 35% margins, values the stock near ₹1,160. To justify ₹1,687 on a 12% discount rate, revenue would need to run roughly 1.5x above that guidance path in every year. The market is therefore either applying a much lower discount rate or pricing in a step-change (exports, acquisitions, a new product cycle) that is not in guidance. DCF is only one of five inputs to our fair value, but this gap is the central fact about the stock. Terminal value carries 63% of the base-case EV, so treat the point estimate with caution.

On our base estimates, Zen earns ₹21.9 per share in FY27E and ₹30.3 in FY28E (including treasury income of about ₹75 Cr a year). At ₹1,687 that is 77x FY27E and 56x FY28E earnings, and 37x FY28E EBITDA on an enterprise value of about ₹14,040 Cr. Enterprise value is 12x FY28E revenue and 21x trailing revenue.

The reference bands are our own working assumptions for growth-stage defence electronics small and mid-caps, not quoted peer medians. Please cross-check against the live peer table on Screener before publishing, as peer multiples move daily.

Peer set and read-across

Analyst read. Zen trades at the top end of any sensible reference band because trailing earnings are depressed, so multiples on FY28E look less extreme than the 84x trailing P/E. But that only works if FY28E delivers. Sell-side sentiment is mixed: Yahoo Finance shows a mean one-year target of about ₹1,822, while Motilal Oswal (Neutral) and Edelweiss (Hold) had both marked ₹1,400 in October 2025.

Book value is ₹209 per share (about ₹1,890 Cr of equity), of which roughly ₹135 per share is cash. Fixed assets are modest at ₹239 Cr plus ₹15 Cr of capital work in progress, so this is an intangible-heavy, IP-and-relationship business and pure NAV understates value. Ashika Institutional argues price-to-book is the appropriate framework for defence because of long-duration order books and embedded IP, and applies it across its coverage.

Analyst read. The ROE-justified multiple of 1.6x sits at less than a quarter of today’s 8.1x. We use the sector-convention mid-point of 5x (₹1,045) in the blend, but weight NAV at only 10% because a book-value approach says little about a business whose returns swing with order timing.

EPV asks what the business is worth if it simply sustains today’s normalised earnings with no growth. We normalise revenue at ₹800 Cr (between FY26’s ₹688 Cr and FY25’s ₹974 Cr) at a 33% EBITDA margin, deduct D&A of 4% and tax at 26%.

Analyst read. At ₹1,687, about ₹1,409 per share, or 84% of the price, is being paid for growth that has not yet arrived. That is an aggressive share of value to assign to future order wins. It does not make the stock a bad business (EPV is deliberately harsh on growers), but it shows how little of the price is covered by today’s earnings power and cash.

Zen does not disclose full segment revenue, so the FY28E split below is our own working assumption. It is anchored to the standalone order book of ₹1,138.8 Cr against ₹100 Cr or so in subsidiaries, and to management’s positioning of counter-drone as the growth engine.

Analyst read. SOTP is the most generous of our fundamental methods because it capitalises FY28E revenue at growth-stage multiples. Even so, it lands about one-third below the market price, which suggests the gap cannot be closed by simply re-labelling businesses; it needs revenue and margins above our base case.

Ranges are anchored to the blended fair value of about ₹960 (see the verdict for the weighting).

The scenarios below use FY28E EPS from each case and the multiple the market might reasonably pay for it: bear 30x on ₹18.7, base 40x on ₹30.3, bull 50x on ₹42.6. Probabilities are our own judgement.

Probability-weighted value: about ₹1,246, which is 26% below the current price. An investor entering at ₹860 instead sees a probability-weighted gain of about 45%, which is what a margin of safety buys. Upside from today’s price exists but sits in the tail; it needs the bull case to play out.

Management reiterated in May 2026 that it expects ₹4,000 Cr of cumulative revenue across FY27–28, with about ₹1,000 Cr of the existing order book scheduled for execution in FY27 and long-run targets of 35% EBITDA and 25% PAT margins. An earlier company statement referred to ₹6,000 Cr over three financial years, so the multi-year target has shifted.

*Illustrative split of the ₹4,000 Cr cumulative FY27–28 guidance; management has not published a year-wise breakdown beyond the ₹1,000 Cr of FY27 execution from the existing order book.

Analyst read. Structural demand is real: counter-drone is a genuine gap in force structure, and the government’s Indian-designed procurement preference favours a vendor like Zen. The question is timing and conversion. Guidance needs revenue to roughly triple from FY26 by FY28, whereas Q1 FY27 ran at about ₹570 Cr annualised.

Shareholding trend (% of equity)

Top 10 institutional and fund-house holders

Entity-level (parent AMC) holdings from Simply Wall St as of the latest available update; figures may lag the live quarter. Refer to BSE and NSE shareholding filings for scheme-wise and FPI-wise detail.

Promoter entity note. The Atluri family holds 48.51% in aggregate, led by Ashok Atluri (about 21.7%) and Kishore Atluri (about 16.3%), with the balance across other family members. The promoter stake has fallen from 60.14% at March 2023 through 55.07% in FY24 to 49.05% from December 2024 and 48.51% since September 2025; it has been stable for the last four quarters.

Analyst read. Institutional ownership is thin for a ₹15,000 Cr company, but it is rising: DIIs went from 3.3% in March 2024 to 10.4% in June 2026, with Motilal Oswal and Kotak now the two largest fund houses on the register. The retail base grew to 3.30 lakh accounts by December 2025 and has since thinned to 2.91 lakh, which is consistent with retail holders exiting after the FY26 earnings decline while domestic funds added.