Multibagger defence stock jumps 4% as Motilal Oswal initiates coverage

Shares of Zen Technologies rose nearly 4% in early deals on Thursday after brokerage Motilal Oswal initiated coverage on the stock with a buy call. It sees 31% upside to the stock at Rs 1775 against the current market price. The multibagger stock climbed 3.90% intra day to Rs 1405 in early deals. Zen Technologies stock opened higher at Rs 1384.95 on BSE. The defence stock has rallied over 1312% in the last three years. Total 0.13 lakh shares of the firm changed hands amounting to a turnover of Rs 1.79 crore in Thursday’s session. Market cap of the firm climbed to Rs 11,329 crore on BSE.    

In terms of technicals, the relative strength index (RSI) of Zen Technologies stands at 62.9, signaling it's trading neither in the overbought nor in the oversold zone. Zen Technologies stock has a one-year beta of 0.7, indicating very low volatility during the period. Zen Technologies shares are trading higher than the 5 day, 10 day, 20 day, 50 day, 100 day and 200 day moving averages.    

“With a healthy order book of Rs 1400 crore and a likely inflow CAGR of 37% FY24-27, we expect its revenue/EBITDA/PAT to clock a CAGR of 63%/57%/56% over FY24-27. We initiate coverage on the stock with a BUY rating and a price target of  Rs 1,775 based on 40x Jun’26E earnings. We expect the company to: 1) grow much faster than peers, 2) have a very strong margin, and 3) expand into newer segments,” said Motilal Oswal.

“The addressable markets for simulators and counter-drones in India are estimated at Rs 14000 crore  and Rs 12,000 crore, respectively, over the next five years. The company commands a significant market share in both these segments, with just 2-3 players in the defense simulator market and 5-6 players in the counter-drone market,” the brokerage added.  

Zen Technologies Limited designs, develops, and manufactures defence training systems, based on sensors and simulators technology. The company’s category of products includes land-based military training simulators, driving simulators, live range equipment and anti-drone systems. The company also has a training platform in Hyderabad, with an integration of its complete product range. Its Anti-Drone System (ZADS) system works on drone detection, classification and tracking on passive surveillance, camera sensors and neutralization of threat by jamming drone communication.