Release Date: November 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Zen Technologies Ltd (BOM:533339, Financial) has maintained its leadership position in training and simulation, with a strong focus on product development and improvement.
- The company is expanding its market reach into the Navy and Air Force sectors, both organically and through acquisitions.
- Zen Technologies Ltd (BOM:533339) has a robust order pipeline of 3,500 crores, with expectations of 1,200 crores in orders by the end of the financial year.
- The company is planning to expand its presence in the US market, with potential manufacturing facilities to comply with 'Make in America' policies.
- Zen Technologies Ltd (BOM:533339) has raised 1,000 crores through QIP, which was oversubscribed by more than five times, indicating strong investor confidence.
Negative Points
- The company experienced a drop in gross margins due to the evolving nature of new products and geographical and product mix impacts.
- Order inflow has been slow, with no new orders in Q2, although significant orders are expected in the latter half of the financial year.
- There is uncertainty regarding the exact split between simulator and anti-drone system orders, making future revenue projections less predictable.
- The company faces competition from established players like Bharat Electronics Limited in India and international companies in the simulator and anti-drone markets.
- Zen Technologies Ltd (BOM:533339) acknowledges the high failure rate of acquisitions, which poses a risk to their expansion strategy.
Q & A Highlights
Q: With the revenue guidance for FY25 set at 900 crores and already achieving 500 crores in the first half, is there any change in the revenue guidance for FY25 and what are the expectations for FY26?
A: We remain cautious with our target of 900 crores for FY25 and hope to exceed it. For FY26, we anticipate a 50% CAGR over the next three years based on the FY25 figure. (Respondent: Unidentified_1)
Q: Can you provide insights into the order book for the second half of FY25 and FY26, including the split between expected systems and simulation systems?
A: We expect orders towards the end of Q3 and in Q4, with about 1,200 crores worth of orders anticipated. The order book will likely maintain a 60:40 split between simulators and other systems. (Respondent: Unidentified_1)
Q: What are the growth opportunities in the US market, and are there plans to set up a manufacturing facility there?
A: We see significant opportunities in the US market, particularly with changes in bureaucracy. We plan to set up a manufacturing facility to comply with the "Make in America" policy, aiming for 51% local manufacturing. (Respondent: Unidentified_1)
Q: Can you elaborate on the potential of AI Turing and its products?
A: AI Turing focuses on remote control weapon stations and surveillance systems. These products are seen as having significant market potential both as adjuncts to anti-drone systems and as standalone offerings. (Respondent: Unidentified_1)
Q: What is the expected timeline for establishing a manufacturing facility in the US, and will it cater only to the US market?
A: We anticipate setting up the facility within eight months, which will cater to the entire Americas, including North and South America, and potentially NATO countries. (Respondent: Unidentified_1)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
