Zen Technologies shares declined as much as 9% to ₹1,613.60 on the NSE following the release of disappointing Q1 FY27 results. The defence training solutions company reported a 29% year-on-year decline in consolidated net profit to ₹34 crore for the quarter ended June 30, 2026, compared with ₹48 crore in Q1 FY26. According to latest reports, revenue from operations also fell 10% YoY to ₹142 crore during the same period, down from ₹158 crore in the previous year. The stock declined from its previous close, even as the benchmark Nifty 50 gained about 0.7%. As per multiple reports, the revenue decline reflects the backend-loaded nature of the company's current execution cycle, with major shipments scheduled from Q2 FY27 onward. Zen Tech stated that Q1 FY27 revenue is consistent with expectations and reflects the early stage of its current order book's execution cycle, with expected revenue weighted towards Q2 FY27 and Q3 FY27.
Motilal Oswal has maintained a Neutral rating on Zen Technologies with an unchanged target price of ₹1,600 in its research report dated July 27, 2026. According to the brokerage's latest report, the stock currently trades at 50.3x/35.9x/28.7x P/E on FY27/28/29E earnings. The research firm noted that Zen Technologies' Q1 FY27 result was weaker than estimates due to lower-than-expected execution and higher other expenses, which affected EBITDA margin. However, Motilal Oswal expects order inflows and improvement in execution to be key re-rating drivers for the stock going forward. The brokerage believes that new verticals may take time to start contributing and the pace of order book additions could weigh on stock performance, similar to ICICI Securities' concerns.
ICICI Securities has downgraded Zen Technologies to 'Hold' from 'Add' following the weak Q1 performance, while retaining its target price of ₹1,610. According to the brokerage's latest report, the downgrade cites weak execution trends extending from FY26, slower order book additions, and limited visibility on near-term revenue conversion as key concerns. The company's current order book stands at ₹1,400 crore, which includes the ₹180 crore simulator order received in July 2026 for tank simulator upgradation. ICICI Securities believes that new verticals may take time to start contributing and the pace of order book additions could weigh on stock performance. The brokerage maintains that the company's cumulative FY27–28 revenue guidance of ₹4,000 crore hinges on exiting FY27 with an order book of approximately ₹2,500 crore.
The weak profitability was driven by significant increases in operating costs across multiple categories. As reported by latest data, employee expenses increased to 24% of revenue from 20% a year earlier, manufacturing costs rose to 9% from 5%, while other expenses nearly doubled to 21% from 10%. EBITDA (excluding other income) fell 40% to ₹39 crore from ₹65 crore in the year-ago period, with EBITDA margin contracting sharply to 27.32% from 40.95%. The company also reported a one-time loss of ₹3.4 crore during the quarter, in addition to the exceptional loss of ₹3.37 crore from the fire incident at its subsidiary. PAT margin stood at 22.49%, compared with 33.55% in Q1 FY26 and 26.53% in Q4 FY26, contracting by 1,106 basis points YoY. Material consumption costs spiked significantly to ₹84.27 crore in Q1 FY27 from ₹29.13 crore in Q1 FY26, leading to operational margin compression.
According to latest reports, Zen Technologies' order book stood at ₹1,239.02 crore as of June 30, 2026, down about 7% from the end of FY26. The company subsequently received a ₹177.50 crore simulator order in July 2026 for the upgradation and integration of Tank and Crew Gunnery Simulators. The consolidated order book comprises ₹1,153.77 crore in domestic equipment and ₹85.25 crore in export equipment. Zen Tech stated that the order book improved substantially and was largely secured starting from October 2025, with the typical execution cycle of these orders around twelve months. Further orders received till Q2 FY27 are expected to be partially executed by Q4 FY27. The company emphasized that taken together, its order book remains strong and executable, with the majority expected to be converted into revenue from Q2 FY27 onwards. As per Motilal Oswal, orders started flowing in from July 2026, and the brokerage expects further inflows from simulator orders worth ₹7-8 billion, followed by anti-drone orders. The company is continuously adding new capabilities to widen its portfolio of offerings, and going forward, subsidiaries are also expected to witness improvement in inflows.
