Zen Technologies Limited received an order worth ₹37 crore from the Government of India for an anti-drone system. The stock fell 25% last year, but with a b financial position and new orders, it has the potential to rally in the long term.
Stock Market: Stocks in the defense sector are currently in investors' spotlight. Domestic orders and government support are causing significant movement in the share prices of defense companies. In line with this, Zen Technologies Limited has secured a significant order from the central government, which could keep the stock in focus for trading on Monday.
In the last trading session, Zen Technologies shares closed at ₹1,420. The company's market capitalization stands at ₹12.77 thousand crore. Over the past year, the stock has fallen approximately 25%, but with new orders and other existing orders, it is expected to perform better.
Zen Technologies: A Long-Term Multibagger Stock
Zen Technologies Limited has delivered multibagger returns to investors over the past five years. The stock soared from ₹78 to its all-time high of ₹2,627. However, due to profit booking, it is currently trading approximately 40% below its 52-week high. Despite this, the stock has delivered approximately 1,600% returns over the last five years.
The company is active in the aerospace and defense sectors and recently disclosed in an exchange filing that it has received a mega order from the government. Zen Technologies has secured an order worth approximately ₹37 crore from the Ministry of Defence, Government of India, for the supply of hard-kill anti-drone systems. The company stated that this order will be completed within one year.
The Company's Financial Health
Zen Technologies has a debt-to-equity ratio of just 0.05, making it an almost debt-free company. The company's earnings have shown improvement over the past few quarters. Its ROE (Return on Equity) stands at 26.1%, which is considered a healthy return for investors.
However, due to high valuations, profit booking has occurred in recent months. As a result, the stock's P/E ratio has come down to 51, which is below the defense sector's average P/E of 70. This suggests that the stock still holds investment potential.
Potential Rally After Profit Booking
Zen Technologies' stock has the potential to stabilize and rally again after profit booking. The new order from the government and the company's b financial position enable it for better performance.
For investors in the defense sector, Zen Technologies is an attractive option because it has not only been capable of delivering multibagger returns in the long term, but new orders also provide clarity on the company's growth trajectory.
