ZEN TECHNOLOGIES LTD.
 
  

 
 

 

SHARETIPSINFO >>Research Reports >> ZEN TECHNOLOGIES LTD(02-05-2009)

 

LISTING
CMP
Rs 118
52 WEEK HIGH/LOW
Rs 197/Rs 71
FACE VALUE
Rs 10
PE RATIO
9
VOLUME
7500
MARKETCAP
Rs 78 Crore
P/BV
2.9
DIV %
30%
DIV YIELD
2.5%

COMPANY OVERVIEW:
Zen Technologies Ltd was incorporated in the year 1993 and it went public in 2000. The company is engaged in developing state of art simulator for weapons and allied defense equipments.
The company has supplied over 170 simulators to over 70 customers all over the country. Zen Technologies has been recognized for its in house R&D capabilities by various organization including Ministry of Science and Technology and Department of Scientific and Industrial Research.


Clients:
Central Police Organization
Paramilitary Forces
Armed Forces
Various State Police Forces

Product:
Zen Advanced Weapons Simulator(Zen AweSim)
Zen Small Arm Training Simulator(Zen Sat SL)
Zen Hand Grenade Simulator(Zen  HE36S)
Zen Anti Tank Guided Missile Simulator(Zen ATGM Sim)
Infantry Combat Vehicle Integrated Missile Simulator(Zen BMP 2 IMS)
Zen Infantry Combat Vehicle Driving Simulator(Zen BMP 2DS)
Zen Combat Training Simulator System (Zen CTSS)
Zen Tactical Engagement Simulator(Zen TacSim)
Zen Artillery Forward Observers Simulator(Zen ArtyFOS)
Zen 81mm Integrated Mortar Simulator (Zen 81mmIMS)
Zen Bus Driving Simulator(Zen BusSim)
Zen Driving Simulator(Zen DS)
Zen Mining Equipment Simulator(Zen METS)
Zen Driver Aptitude Testing System(Zen DATS)

INVESTMENT RATIONAL:
Design and development of simulator requires competence in the area of optics, mechanics, software and hardware. Zen technologies have built competence in these areas and hence have competitive advantages.
The industry has high entry barrier because of technology complexity.
The reusable components available to Zen reduce the time to market the product and also reduce the development cost.
Increasing defense outlay will benefit the company in the coming years.

RISK FACTORS:
Long sales cycle as the primary customer of the company is defense could adversely affect the result.

SHAREHOLDING PATTERN:

 

 

NO.OF SHARES

% OF TOTAL

PROMOTERS

4106450

 

48.01%

 

INSTITUTION

0

 

0

 

GENERAL PUBLIC

4447550

 

51.99%

 

GRAND TOTAL

8554000

 

100%

 

 

FINANCIAL:

 

 

31/03/05

31/03/06

31/03/07

31/03/08

TOTAL INCOME

19.41

20.91

23.81

28.28

EXPENDITURE

-8.62

-10.2

-13

-14.73

OPERATING INCOME

10.79

10.71

10.81

13.55

DEPRECIATION

-0.11

-0.18

-0.25

-0.3

PBIT

 

10.68

10.53

10.56

13.25

INTEREST

 

-0.19

-0.28

-0.52

-0.58

PBT

 

10.49

10.25

10.04

12.67

TAX

 

-3.58

-3.07

-2.86

-1.72

PAT

 

6.91

7.18

7.18

10.95

CHANGE IN TOTAL INCOME: CAGR IN TOTAL INCOME IS 13.36%.
CHANGE IN OPERATING INCOME: CAGR IN OPERATING INCOME IS 7.9%.
CHANGES IN NET PROFIT: CAGR IN NET PROFIT IS 16.6%.

RATIOS:

 

 

31/03/05

31/03/06

31/03/07

31/03/08

EPS

 

8.078092

8.393734

8.393734

12.80103

OPM

 

55.5899

51.21951

45.40109

47.91372

NPM

 

35.60021

34.33764

30.1554

38.71994

INTEREST COVER

56.21053

37.60714

20.30769

22.84483

Key Highlights:
EPS  increased from Rs8.07 to Rs12.8
OPM remained healthy throughout above 45%. Though decline is witnessed from 55% to 48% now.
NPM increased from 35.6% to 38% now.
High interest cover show less dependence on debt component.

COMPARISION OF Q3FY2009 WITH Q3FY2008:

 

 

31/12/07

% CHANGE

31/12/08

TOTAL INCOME

5.05

162.90%

 

13.28

EXPENDITURE

-2.06

 

 

-8.05

OPERATING INCOME

2.99

75%

 

5.23

DEPRECIATION

-0.09

 

 

-0.13

PBIT

 

2.9

 

 

5.1

INTEREST

 

-0.23

 

 

-0.36

PBT

 

2.67

 

 

4.74

TAX

 

-0.15

 

 

-0.01

PAT

 

2.52

87.70%

 

4.73

Key Highlights:
Total Income for the quarter increased by 162.9%.
Operating Income zoomed by 75%.
Profit After Tax surged by 87.7%.

VALUATION:
At cmp of Rs118 the stock is trading at 8.5 xs to trailing twelve months earning. We value the company at 12x looking at the growth and the significant entry barrier in the industry. The fair valuation we arrive at is Rs156 per share.

CONCLUSION:
Investor with 6 to 8 month investment horizon could start accumulating this stock on every dip. We expect 25-30% return from this counter.

 

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