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Tuesday, January 22, 2008

Zen Technologies:-The scrip to watch out for in the year 2008

Zen Technologies:-The scrip to watch out for in the year 2008
Buzz on the bourses:-
Scrip:Zen Technologies
Bse code:590032
Cmp:139
Target:210
Duration:4-6 months
Returns expected:50%
 
Story:-Finally "Zen tech" is into the radar of several investors again.More importantly India"s most renowned investor Rakesh jhunjhunwala has approached the company and is taking 450000 shares at a price of 125rs through issue of warrants.These is indeed a great news for the shareholders of zen tech and one can expect the company to give significant upsides in the coming quarters.It should be important to note that Mr jhunjhunwala apparently approached the company couple of years ago and was in advanced stage to have the stake in the company at a price of over 300rs.But that never materialized because of the bad blood between the promoters and Mr Jhunjhunwala.Infact after the news the price of zen tech crashed severely to below 100 levels from 300 odd rs.Its of no intelligence what happened then and for the power of money and supremacy who did what....hehehe...Thankfully things have change for good and now both the promoters and the raring bull are in good terms.Valuation wise too, Zen tech is quoting cheap at 7 P.E of its expected 08 eps of 20rs.One can buy the counter for a target of over 200rs in a horizion of 4-6 months.
 
Recently The company has declared its quarterly results for quarter ending December 2007.It has reported quarterly sales of Rs. 4.64 crores and net profit of Rs. 2.53crores. On an equity capital of Rs. 7.64 crores, the quarterly EPS is Rs. 3.5 (Rs.14 annualised). The NPM has been maintained at 50%.
ZEN Technologies Ltd Issue warrants (convertible in to Equity Shares 4,50,000) and Equity Shares 4,50,000 at 135/- to Rakesh Jhunjhunwala and Rekha Jhunjhunwala & Peomoters (3,50,000) on preferential basis on 18 Jan 2008. Check the bseindia site for this this company Annoncements.
 
This stock should not be looked at 2-3 days point of view. My suggestion to every investor would be to remain invested for very long term or dont repose the faith in this company. Management is a good enterprising team with good values and you can rest be assured they will start getting orders very soon. They may announce some big orders in march,08 but that is not the end of the stock. This stock is a 4 figure stock at some point and when is something elusive. But with global spend on DEFENCE this kind of innovative companies products will be in demand and lot of scope for exports, primarily to african countries and middle east as well. They may open office in africa as well at some point if its financially viable. they have invested a handsome amount in middle east office for a definite reason. one needs to understand that.
 
They are just growing in size at a moderate pace now and when they get the big orders in the coming years they will expand to many countries and thats when you would see the real valuation coming up. My take is if someone can hold for 4-5 years this stock should touch 4 figure mark. Just visit the website of zen technologies and also see the global potential of such simulator companies and their market capitalization and you will be flabbergasted at the gross undervaluation. If you look at the previous fii investments some leading names have entered and exited because the delivery did not happen in the anticipated time. Now with their expansion kicking off as per schedule very soon you will see fii's again buying in a big way and this stock will catch the fancy of some good savvy investors and this time it will zoom to unchartered territory where it will be continuosly locked in upper circuit after upper circuit, because their intellectual capital is worth more than 1,500 crores.
ZEN TECHNOLOGIES LIMITED (ZEN), incorporated in 1993, is a pioneer in the design, development and manufacture of world class, (DEFENCE) state-of-the-art training simulators. Our mission is to provide to our customers, the highest level of products and services in our areas of expertise. ZEN is an ISO 9001:2000 (QMS) and ISO/IEC 27001:2005 (ISMS) Certified Company.
 
Zen Technologies Ltd has CRISIL has assigned 'SME 1' rating to the Company on April 24, 2007. This rating indicates 'Highest level creditworthiness' adjudged in relation to other Small and Medium Enterprises.
 
ZEN has been at the forefront of applying new technologies and developing new products and is actively involved in indigenization of technologies, which are helpful for Indian security forces. ZEN was the first company in India to commercialize PC-based visual simulation technology for small arms training simulators.
ZEN has developed an advanced version of ZEN iFATS- Advanced Weapon Simulator (ZEN AWeSim), which comes in two versions, one integrated with un-tethered weapons and other one with tethered weapons. ZEN AWeSim can train up to 8 firers simultaneously and provides for 3D based targets and video-based scenarios for developing judgmental and reflex skills.
 
This company has a great future.Here are the estimated financial projections:FY2007-08 & FY2008-09Sales Revenue 20.00 Cr. & 50.00 Cr.Profit After Tax 10 Cr. & 25 Cr.EPS Rs.15 & Rs.34.5.Even if we give a conservative P/E of 10, It should be trading at Rs.350+ based on FY 2008-09 earnings. Note: EPS was calculated based on the current equity.Will not disclose my one and two year targets for this scrip as it may make your eyes pop out!Enter current price at 135/- Short term Target 250/- Long Term Target 1000/-.
 
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