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Disappointing results

* Zen Tech’s 3QFY25 revenue, EBITDA, and PAT came in below our estimates.

* Revenue was up 44.3% YoY at INR1.42b, a 39% miss on our estimate of INR2.31b.

* Absolute EBITDA was down 17% YoY at INR367m, vs. our estimate of INR859m (57% miss), mainly because of higher-than-expected total operating expenses as a percentage of sales. EBITDA margin contracted 1910bp YoY/690bp QoQ to 26.0% vs. our estimate of 37.2%.

* PAT at INR386m came in 39% below our estimate of INR637m. PAT margin contracted 500bp YoY to 27.3%, 30bp lower than our expectation of 27.6%.

* Order book as on 30th Dec’24 stood at INR8.2b.

* In 3QFY25, the company transferred 9,000 equity shares to its eligible employees, to whom the grants were issued earlier under Zen Technologies Limited Employee Stock Option Plan-2021, from Zen Technologies Limited Employees Welfare Trust.

* Further, the board of directors approved the following acquisitions (i) 100% stake in Applied Research International Private Limited in multiple tranches; (ii) 100% stake in ARI Labs Private Limited in multiple tranches; (iii) 45.33% stake in Bhairav Robotics Private Limited by way of subscription; (iv) 51% stake in Vector Technics Private Limited by way of subscription.

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