Mehabe score: 4 G Factor: 2 Piotski Score: 5 The stock has a rating OBSERVE & HOLD. The mehabe team score is reflective of its fundamental and technical merits. A rating above 8 is considered good buy. The stock has a G-Factor of 2 and Piotski score of 5.
Description
Zen Technologies Limited was incorporated in 1996. The co. designs develop and manufacture combat training solutions for the training of defense and security forces. It is actively involved in the indigenization of technologies, which are beneficial to Indian armed forces, state police forces, and paramilitary forces.
Zen Technologies is headquartered in Hyderabad, India with offices in India and the USA.
Main Points
Product Portfolio
Simulators (87% in FY20 vs 76% in FY19): Co is engaged in designing, developing, and manufacturing Training Simulators for Police and Paramilitary Forces, Armed Forces, Security Forces, etc. The products of the company are divided into 3 major categories viz. Land-based Military Simulators, Driving Simulators, and Mining & Special Equipment Simulators.
: Co. produces over 40 different Live Fire, Live Instrumented, Virtual, and Constructive training systems to support individual and collective training capabilities.Site:ZENTECMain Symbol:ZENTEC
Stock trades at 97.0, above its 50dma 87.53. It also trades above its 200dma 80.52. The stock remains bullish on techicals
The 52 week high is at 106.90 and the 52week low is at 49.70
Price Chart
P/E Chart
Sales and Margin
Strengths
– is almost debt free.
-Debtor days have improved from 176.19 to 128.05 days.
Weakness
– The company has delivered a poor sales growth of -1.19% over past five years.
-Earnings include an other income of Rs.2.96 Cr.
Competition
– The industry trades at a mean P/E of 35.1x. Zen Technologies trades at the industry’s max P/E of 173.22x. ZENTEC trades at a P/E of 173.0x
– Industry’s mean G-Factor is 3.6 while the mean Piotski score is 9.0. ZENTEC has a G-Factor of 2 and Piotski scoreof 5.
– Average 1 month return for industry is 21.8%. The max 1- month return was given by Happiest Minds: a return of 51.6 %
Quarterly Results
Sales for period ended Jun 2021 is Rs 9.13 cr compared to Rs 4.16 cr for period ended Jun 2020, a rise of 119.5%
Company reported negative operating profit of Rs -0.05 cr for period ended Jun 2021. For same period last year, operating profit was -0.89
The EPS for Jun 2021 was Rs -0.04 compared to Rs 0.17 for previous quarter ended Mar 2021 and Rs -0.09 for Jun 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 54.54 cr for period ended TTM vis-vis sales of Rs 49.57 cr for the period ended Mar 2021, a growth of 9.1%. The 3 year sales cagr stood at -16.1%.
Operating margins expanded to 15.75% for period ended TTM vis-vis 15.65% for period ended Mar 2021, expansion of 10.0 bps.
Net Profit reported at Rs 4.45 cr for period ended TTM vis-vis sales of Rs 4.1 cr for the period ended Mar 2021, rising 7.9%.
Company reported a poor Net Profit CAGR of -38.6% over the last 3 years
Balance Sheet Statement
Cash Flow Statement
Cash Flow comments
CashFlow from operating activities was positive.
Sales Growth
Profit Growth Statement
Profit Growth Statement
Stock Price CAGR
Return of Equity
General Comments
– The company has worsened on its Return on Equity (RoE) metric. The RoE on Last Year basis was 2.0% compared to 17.0% over the last 3 Years. – The stock has given a return of 86% on a 1 Year basis vis-vis a return of 4% over the last 3 Years. – The compounded sales growth on a TTM bassis is -47% vis-vis a compounded sales growth of 8% over the last 3 Years. – The compounded profit growth on a TTM basis is -90% vis-vis a compounded profit growth of 134% over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has remained largely constant. The Jun 2021 fii holding stood at 0.0% vis-vis 0.01% for Mar 2021 – Public shareholding has remained largely constant. The Jun 2021 public holding stood at 39.81% vis-vis 39.8% for Mar 2021
Conclusion
– is almost debt free.
-Debtor days have improved from 176.19 to 128.05 days. – The company has delivered a poor sales growth of -1.19% over past five years.
-Earnings include an other income of Rs.2.96 Cr.
Fundamentally, the stock remains weak on business fundamentals. Weak near term results have dampened and questioned business drivers. We suggest to wait for a upturn in business performance.
Technically, the stock trades above its 50 DMA 87.53 and is trading at 97.0 It has shown near term bullish momentum contrary to business fundamentals. We suggest to observe price action. However as investors, who like to avoid timing the markets, we suggest to avoid the stock
