SHARETIPSINFO >>Research Reports >> ZEN TECHNOLOGIES LTD(02-05-2009)
LISTING |
|
|
Rs 118 |
|
Rs 197/Rs 71 |
|
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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