ZENTEC - Fundamental Analysis

Last Updated Time : 02 Aug 25, 12:58 am

Fundamental Rating: 4.1

Zen Technologies Ltd. (ZENTEC) offers a high-quality business rooted in defense tech, with standout capital efficiency and minimal debt. Though short-term earnings volatility and rich valuation weigh on sentiment, its long-term fundamentals still shine.

🔍 Financial Snapshot

Return Metrics

ROCE: 36.7%, ROE: 26.1% — exceptionally high; indicates effective asset use

EPS: ₹27.8 — robust profit generation capacity

Quarterly Performance

PAT Q-o-Q: ₹101 Cr → ₹47.8 Cr — sharp decline, possibly linked to order-based revenue variability

Profit Variation: -37.8% — caution signal on near-term earnings stability

Balance Sheet Strength

Debt-to-Equity: 0.04 — almost debt-free, gives resilience and capital flexibility

Dividend Yield: 0.12% — token payout, hints at growth-focused reinvestment

Book Value: ₹188 vs CMP ₹1,606 — high premium, justified only if growth persists

📊 Valuation Insights

Metric Value Takeaway

P/E Ratio 57.8 Premium valuation — pricing in strong future growth

P/B Ratio ~8.54 Market expects sustained performance; margin for error is thin

PEG Ratio 0.14 Suggests undervaluation if growth resumes at historical pace

The PEG ratio below 1 typically signals undervaluation — but near-term earnings dip tempers optimism.

🛡️ Business Model & Moat

Core Offering: Simulators, anti-drone systems, combat training tools — crucial for modern defense forces

Clients: Indian Armed Forces, government agencies, with increasing export potential

Edge

Proprietary IP in defense tech

First-mover advantage in simulation solutions

Favorable defense capex trends and government support

📉 Technical Outlook

RSI: 24.5 — oversold zone, potential near-term rebound candidate

MACD: -48.3 — bearish momentum, trend still weak

DMA Picture

Current price below 50-DMA (₹1,844) and 200-DMA (₹1,698) — short-term downtrend

52W Index: 39.3% — stock has fallen significantly from ₹2,628 peak

🎯 Entry Zone & Long-Term Strategy

Suggested Entry: ₹1,550–₹1,600 — near current price, aligns with RSI-driven opportunity

Outlook (12–24 months): ₹2,100–₹2,400 if defense orders ramp up and profitability stabilizes

Investor Fit

Ideal for growth investors with a long horizon

Avoid for momentum traders — current technicals are unfavorable

Keep a close watch on quarterly earnings and order book disclosures

Want to see how ZENTEC stacks up against other defense plays like Paras Defence or Data Patterns? I can chart a peer comparison to spot breakout contenders or safer alternatives. 🎯📡📘

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