Zen Technologies hits 5% lower circuit limit; here's why

Shares of Zen Technologies Ltd hit their lower circuit limits in Tuesday's trade, as its June quarter results undershot consensus estimates. Analysts noted that Zen Tech's revenue and Ebitda fell 37.9 per cent and 41.9 per cent, respectively, due to a spillover of Rs 60–70 crore revenue to the next quarter owing to a change in product specifications. This, ICICI Securities said, should be booked in Q2FY26. 

"Given the delays in ordering, we reduce our FY26/FY27 EPS estimates by 30 per cent/22 per cent. We downgrade the stock to HOLD, from Buy, with a revised target price of Rs 1,700, based on 35x FY27E EPS," it said.

The stock was locked at its 5 per cent lower circuit limit at Rs 1,603.70. 

Over the past 2–3 quarters, Zen Tech cumulatively invested Rs 160 crore into various acquisitions. The investments are envisaged to be margin-accretive and likely to lead new areas of growth for the company. This apart, Zen’s continuous R&D investments are likely to improve and expand its product offering, ICICI Securities said.

"That said, we believe, order accretion shall be closely monitored by the Street," it said.

MOFSL reduced its earnings estimates by 22 per cent for FY26 and 18 per cent for FY27 to factor in the impact of the current temporary slowdown on near-term execution. It arrived at a revised target of Rs 1,650 against Rs 1,850 earlier, based on 30 times September 2027 earnings. It maintained 'Neutral' on Zen Technologies.  

Nuvama said this remains a key concern for future growth visibility. The management stays hopeful of Rs 650 crore order inflows in Q2FY26 coupled with US/NATO exports optionality and India’s defence emergency procurement orders throughout FY26.

"Downgrade to ‘HOLD’ as we find an approaching earnings trough with a recovery likely only from H2FY27E (if and when ordering picks up). We are cutting FY26E/27E EPS by 8 per cent/19 per cent and target PE to 40x (earlier 45x) with rollover to Sep-27E for a target price of Rs 1,800 (earlier Rs 2,170)," Nuvama said.

For now, the management maintains its previous guidance of 50 per cent CAGR in revenue, achieving cumulative revenue of Rs 6,000 crore over FY26-28, with Ebitda margin and PAT margin of 35 per cent and 25 per cent, respectively, across the years. The management expects this to be supported by pick-up of regular procurement cycle; finalisation of emergency procurement orders; and increased exports across Africa, the Middle East, the US & Latin America, CIS countries, Southeast Asia, and NATO-aligned countries.