This defence share rises 60% in four days. Experts give 'portfolio stock' tag

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After the Central Government unveiled liberal drone rules, shares of Zen Technologies shot up nearly 60 per cent in the last four days trade sessions. According to stock market experts, this rally may further continue as Zen Technologies is the only listed company in India, which is in drone manufacturing.

Currently, the Hyderabad-based company is in defence supply and its order book is quite strong. In the near future, drones can be used by e-commerce giants for delivery of their order. Once, the drone use is allowed in e-commerce sector, the stock is expected to further go northward. 

Experts went on to add that Zen Technologies is a ‘portfolio stock’ that one can have in one’s stock portfolio. However, they advised investors to first wait for profit-booking as the stock has already surged more than 50 per cent last week.

Speaking on the reason for rise in this defence stock price, Avinash Gorakshkar, Head of Research at Profitmart Securities said, “Zen Technologies share price has been skyrocketing after the Indian government’s decision to liberalise drone rules in India. Since, Zen Technologies is the only listed company in India, which is in drone manufacturing, its share price has been surging. Company’s order book is also quite strong and the defence company has recently bagged order worth 155 crore from the Indian Air Force.”

Avinash Gorakshkar of Profitmart Securities said that currently, drone is used in defence sector only. But, there are chances of Indian government allowing use of drone in supply-chain system for e-commerce platforms like Amazon, Flipkart, etc. This is already happening in the US and in the wake of Covid-19, there are chances of Indian government allowing the drone use by e-commerce platforms for delivery of their orders. In that case, the stock may further scale northward and hence one should add this stock in one’s portfolio once there is profit-booking in the counter. He advised investors to wait for correction in the counter as it has already scaled more than 50 per cent last week.

Standing in sync with Avinash Gorakshkar’s views; Santosh Meena, Head of Research at Swastika Investmart Ltd said, “There is a turnaround story for Zen Technologies where it has a strong order book and new drone rules are another positive trigger for its future growth. Technically, it is showing strong bullish momentum following a breakout of a bullish inverse head and shoulder formation where 158 is an immediate hurdle. Above this hurdle, it is likely to head towards 200 to 225 level where 169 will be an intermediate hurdle.”

Zen Technologies order book has almost doubled in July to August as company’s order book on 1 September, 2021 stood at 402.6 crore against its order book of 191.60 crore on 30 June, 2021. The defence company has recently bagged order worth 155 crore from Indian Air Force for supplying Counter Unmanned Aircraft Systems (CUAS). The Hyderabad-based company informed about the development through its regulatory filing at Indian exchanges.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.

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