Finally some order flows coming in, good 700Cr in Oct-Nov.
Disc - Not invested but tracking
37 Cr. of ADS from MoD
108 Cr. for Tank Simulator from MoD
289 for Anti Drone Systems Upgrade from MoD
Total of 434 Cr. In Oct+Nov, right ?
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I don’t think that is the case. Promoter haven’t sold any shares in 2025 as far as I know. Reduction in promoter holding in September 2025 quater is because Ravi Kumar Midathala has been reclassified as public shareholder from promoter.
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Factory visit of Vector Technics Hyderabad, in which Zen holds 51% bought for 25Cr.(?)
Few things come out clear from the video. VT Management is a technocrat and very hands on.
and this helps gives confidence on Zen Tech management’s decision making process for the acquisitions. Financially, Vector did only 99L of topline and loss of 3.15 Cr. in FY25. Eagerly waiting to see how they did in FY26. Seems like having the DNA to become big.
This video also brings forth another important insight into business like Macfos, as this video is made by Digikey, a competitor of Macfos.
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A notable company in simulator
If you deep dive, lot of risks for the company to manage.
Risks:
- The M&A Integration: Integrating corporate cultures and streamlining R&D across multiple entities is operationally complex. If ARI or Vector Technics face integration bottlenecks, that Rs 190.53 Crore order block turns from an asset into a delayed liability, dragging down the consolidated return on equity (ROE), which currently sits at an impressive 26.1%.
- Speed of the Indian government’s procurement cycle: If delays in orders is seen similar to FY26, that will fail to convert into recognized future revenue
- **The Working Capital Trap: Derived cash conversion cycle as on H1 FY26 was 388 days Vs 247 days at the end of FY25. Driven by the sharp temporary drop in the annualized revenue and execution run-rate during this specific half-year period. Even though the company practically improved its collections (reducing absolute trade receivables from ₹410.42 Crore in Mar to ₹327.43 Crore in Sep). If the government delays payments and debtor days keeps stretched, the company’s current cash pile of Rs 1,188 Crores would evaporate rapidly to fund daily operations. Zen would be forced to raise external debt, instantly killing the “debt-free” premium the market currently assigns to its P/E multiple.
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No reason why govt at centre will delay. That is usually a state govt risk as far as I have seen. And on the M&A, right now it seems that Zen has made some amazing acquisitions given the additions to the order book and the contribution. The risks do seem like opportunities if they can continue on this path.
Procurement is a risk that is visible across the defense space. WHat is important is if the products are must have’s for the Defence ministry. Defense budget will only go up and the govt is keen on modernisation.
Their credit ratings are strong as well.
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There was a delay in procurement this year itself, hence the muted H1.
Not saying govt will delay payment, but it’s a very heavy risk with such a high working capital cycle.
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Revenues of all govt procurement dependent companies tends to be skewed. Q4 is abnormally high with 40% of annual revenue.
What I am waiting for in Zen Tech is exports. Export pricing for cutting edge defence products can fetch a premium of 1.5 to 2.5 X domestic govt procurement prices.
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I am usually wary of the companies that depend on the govt for orders and payments. But in the area of defence, this is unavoidable. So this would be a common issue whether it is Zen or Astra/Paras.
Honestly, one wouldn’t wish for the defence companies to be thriving.Rising weapons sales augur dark portends. But then, in the war hungry world, one needs to be ready.
Disclaimer: I am invested in Zen. Biased. No recommendation.
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Is the UAE going to be a new market for anti-drone technology?
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Gulf countries must have spent 8 to 10 billion dollars worth of missiles defending against Iranian missiles and drones and yet a large number of high value targets like airports , embassies, airbases were hit mostly by drones!
They will definitely look at Indian Air Defence and Antidrone systems which proved more effective and cost a fraction, provided US let’s them.
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Why do you think they look at India when they have even more advance equipments provided by China or any other nation. Just to let you know Turkey has most advanced drone system. Except cost what makes us an edge?. Trying to understand.
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I was talking about antidrone and air defence systems and you are talking about drones.
Today’s air defence systems, for that matter most defence equipment has enormous amount electronics, software and threat libraries apart from connectivity.
Trust is BIG issue while buying such equipment.
Regarding Chinese equipment, I doubt if Gulf countries would trust them to supply AD systems due to association with US and also the recent failure of their AD systems in battle conditions.
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Reliability and COST are serious issues in AD systems . Just imagine the difference in costs that Israel with those of GCC or US for each missile or drone they intercepted and compare the results.
Regarding quality Indian AD systems stood out by blocking Turkish and Chinese drone swarms very effectively during Operation Sindhoor.
Every country has to make their own decisions and live with the consequences.
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India Moves to Procure Pantsir-S1 Air Defence Systems to Shield S-400 Units and Counter Drone Threats
Even we ourselves are not believing in our own counter drone system
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No. AD systems are layered. They come in 5+ levels and sophistication. Choice depends on what is your threat and what you perceive to be your remedy.
I doubt if India ever used S 400 against drones despite S400 system being a 3 tired system.
Zen seems to be having Anti Drone system but they failed to get any big order for it till now..
The main orders the are getting is for Simulator only.. There is no data available how efficient the Anti Drone system of Zen is .
Lack of orders create doubt if there are able to get the desired kill accuracy or not.
Anti Drone technology seems to be having a great tailwind as of now.. Now it is a must have system for all countries.. A Good system will definitely have a good demand..
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Antidrone systems now account for 40% of Zen’s revenues and they have been getting orders from Indian armed forces.
Zen Antidrone systems have proven themselves during operation Sindhoor.
Unlike most equipment which need updation every 10-15 years, anti drone systems need almost yearly updation.
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u mean 40% of ttm 12 month revenue of zen tech comes from anti drone segment ?
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