Welcome, and thank you all for joining this Q2 and H1 FY 2027 earnings conference call of Zen Technologies Limited. The results and the investor updates have been emailed to you and are also available on the stock exchanges. In case anyone does not have a copy of the same, please do write to us, and we will be happy to send it over to you. To take us through the results for this quarter and to answer your questions, we have with us today Mr. Ashok Atluri, Chairman and Managing Director, Mr. Hari Haran Chalat, Chief Financial Officer, and Ms. Abhilasha Atluri, Head of Investor Relations. We will be starting the call with a brief overview of the performance, which will be followed by the question-and-answer session. Before we start the call, I would like to remind you that the safe harbor clause applies.
With that said, I now hand over the call to Mr. Hari Haran Chalat. Over to you, sir.
Thank you, Ravi. Good evening and warm welcome to all. Thank you for joining us on the Q2 and H1 FY 2027 earnings call. I will take you through our financial performance for the quarter and half year ended 30th September 2026. Consolidated revenue from operations for Q2 FY 2027 stood at INR 345.1 crores, our highest-ever quarterly revenue, representing a growth of 98.8% over INR 173.6 crores in Q2 FY 2026, and more than double the INR 141.6 crores reported in Q1 FY 2027.
As we have consistently indicated in our earlier interactions, our revenue is expected to be weighted towards Q2 and Q3, and this quarter reflects the execution of the order book we have been building since last year. Operational EBITDA for the quarter stood at INR 132 crores, at an operational EBITDA margin of 38.2%, compared with 37.3% in Q2 FY 2026 and 27.3% in Q1 FY 2027.
Profit after tax attributable to shareholders stood at INR 89.5 crores, a growth of 50.7% over INR 59.4 crores in Q2 FY 2026. We had committed in our previous earnings call that as the revenue increases and operating leverage kicks in, we would see the margins normalize towards the 35% EBITDA that we had guided, and this quarter confirms that. Taking the two quarters together, our H1 FY 2027 operational EBITDA margin stands at 35.1%. This is in line with the mid-30s full-year guidance we had shared. We continue to guide a full-year operational EBITDA margin in the mid-30s. I would like to spend some time on the increase in expenses that you would have seen for the quarter. You will note that our employee benefit expense and other expenses have increased in absolute terms this quarter.
On the employee benefit side, it reflects performance incentives accrued during the quarter and the ramp-up of our R&D team headcount, particularly in AI and emerging product areas. This is in line with our communication that we expect to see increasing R&D investments over the year. On other expenses, the increase is primarily due to warranty provisioning, which varies depending on the product mix between ADS and simulators. This quarter, we had a higher mix of ADS, resulting in INR 9.3 crores higher provision in Q2 FY 2027 versus the same period last year. In addition to the warranty expenses, we have also seen increase in consultancy and professional fees towards design and development of certain R&D products in the pipeline. Even after these increases, the employee and other expenses together were 24.4% of revenue this quarter, compared with 26.3% a year ago.
Our cost base has been efficient as we have scaled, even though the absolute numbers may seem to have increased. Coming to the half year, consolidated revenue from the operations for H1 FY 2027 was INR 486.8 crores, a growth of 46.7% over INR 331.8 crores in H1 FY 2026. Operational EBITDA for the half year was INR 170.7 crores, and profit after tax attributable to shareholders was INR 124 crores, compared with INR 107.2 crores in H1 FY 2026. Coming to the order book. The consolidated order book stood at INR 1,375.7 crores as of September 30, 2026, comprising an equipment order book of INR 994 crores and an AMC order book of INR 380.7 crores. During the quarter, we executed INR 345.1 crores of orders and secured new order inflows of INR 481.8 crores.
I would draw your attention to the fact that our order inflow during the quarter exceeded the revenue we executed, so the order book continued to grow even as execution accelerated from INR 1,239 crores at the start of the quarter to INR 1,375.7 crores. This reflects the stable demand across our product categories and gives us visibility into the coming quarters. Let me now turn into working capital and the balance sheet. Our consolidated working capital cycle stood at 379 days as of September 30, 2026, compared with 255 days at the end of Q1. The increase is driven primarily by two factors. First, debtor days increase, which is a direct consequence of our revenue being weighted towards Q2 FY 2027. These are recent receivables from the execution ramp.
Second, advances to suppliers increased as we procure ahead to execute the order book scheduled for delivery through the remainder of the year. Inventory days reduced over the quarter. This also explains the operating cash flows for the half year. The net operating cash flows for the half year was negative, but this is a function of the working capital build I described earlier. The increase in receivables from our back-ended revenue and the inventory and advances deployed to execute the order book. The receivables are recent and largely against government and defense contracts, where collection risk is low, and this build has been funded entirely from our own resources. We remain debt-free with approximately INR 968 crores of cash and bank balances. The business is profitable and cash-generative at the operating level. The cash is currently deployed in working capital that supports our execution.
This is the brief on our financial performance for the quarter and the half year. We can now take questions. Thank you.
Thank you so much. Ladies and gentlemen, we will now begin with the question- and- answer session. Anyone who wishes to ask a question may click on the raise hand icon from the participants tab on your screen. We request participants to keep their question as brief and precise as possible. We will wait for a few minutes until the question queue assembles. Requesting participants to please remain connected. We will take our first question. We have Mr. Amit Dixit of [Goldman Sachs]. Amit, please unmute your microphone and go ahead.
Yeah, hi. Good evening, everyone, and thanks for the opportunity. Congratulations for a good set of numbers. A couple of questions from my side. The first one is on the R&D part as covered by Hari in his opening remarks. Just wanted to understand where specifically we are going to deploy the R&D efforts incrementally, whether it is the new product development or certain subsidiaries that we have acquired over the recent times, we want to scale up operations over there. So just wanted to get a broad sense and the kind of your R&D expense as a percentage of revenue is already industry-leading. Just wanted to understand what is the ultimate objective with this. I mean, where some certain benchmark if you have set for the management. That is my first question.
Thanks, Amit. To answer your question, the R&D efforts, basically the expenses that we are incurring right now are towards the future products and also upgradation of our existing offerings to the customers. So there is a lot of R&D which is going on, as we communicated earlier, into the next-gen defense technologies, especially robotics, AI, and also anti-drone systems and new solutions in the products that we are in right now.
And that is where the R&D efforts are going into. Some of these R&D expenses, as you would already know, some of the subsidiaries do the R&D for us and do the execution as well. But the IP is owned by Zen. So the R&D expenses indirectly also are funded through the subsidiaries. To answer your question on the percentage or the amount of R&D expenses we expect to incur, frankly, we do not put an internal target on the R&D.
We are very opportunistic when it comes to R&D expenses. If we see there is any kind of development which we think is a huge opportunity and which the country needs, we go all in and we don't mind investing our own money, and that's been the USP of Zen till now. To answer your question, last year, FY 2026, the R&D expenses were 12% of the top line, even though internally, like I said, we don't keep any benchmark like that. This year also, we should be in a similar range.
Okay. That is helpful. The second one is-
Yeah, Amit, I would like to add another point. The thing is, when we invest in companies, like acquire a new company, because typically more than the company, there is a lot of IP in that company. So it's actually an R&D expenditure in that sense that this company has already done 10, 12, 15 years of R&D, and they have huge IP. Whether they file patent or not, we assert the right through, we call it IPR, whether they file patents or not is secondary. Overall, our investment typically go into companies that already have a lot of hidden IP or on which they can build a lot of products. So, the actual figure that you see in terms of just the percentage is one, and the second is every acquisition that we do is also actually an IP purchase. Sorry, Amit, go ahead. Yeah.
Thank you. That's quite helpful. The second question is essentially on the C-UAS system or the counter-drone systems. Now, we have our own product, our own IP. We have seen a lot of AoNs pointing to the same. There have been a lot of AoNs, but no orders, unfortunately. Just wanted to get your perspective on how you see the ordering cycle currently, ordering environment currently, because it's not only about Zen, it's about the entire ecosystem that we are seeing that orders have suddenly dried up. But particularly on the counter-drone system, for which there has been a lot of [RFIs] by the government, but we have seen very little action. Just wanted to get your perspective on that.
So two things, Amit. One is that the orders are coming two routes, mostly two routes. One is the FTP, the Fast Track Procurement, and the second is the capital acquisition. As you have seen that FTP approvals have happened now, and we expect maybe a month, two months, the tenders, the RFPs will be floated and responses will be given.
Typically, the deadline is to finish by March, the procurement. Again, for whatever the delays have happened, but I think there is a lot of changes that are happening, and the government really wants to be very wise in framing the specs. It is a very evolving thing. Even if they were to buy something today, tomorrow they would want it to change, and that is where, is the company buying from an Indian company with the Indian IP, or are they buying from some collaborator who is reselling the foreign goods?
That will be the biggest challenge there. But yeah, so the evolving thing has delayed. Of course, the FTP itself is delayed. So those tenders will come in. I think there will be a bunch of orders that will be coming to the Indian players at that point in time. Second is the capital acquisition. That I think is going to take at least a couple of years, two to three years to play out and the orders being placed. So that is the second thing. But as you correctly guessed, there is a huge requirement for these counter-drone systems, and Zen has proven systems, including in well-proven in We should also get a fair share in the tenders that come. But again, what tenders come, what will be the specifications, which tenders will be won by Zen, what is the amount?
We are not able to put any name till the tenders are floated. Then we may get some sense of which are the tenders we will bid for and what is the likelihood of our getting those orders. But yes, you are right. The C-UAS tenders have not come, so there are no orders been placed.
Okay, sir.
Thank you, Amit. Just open it. Go ahead.
Vikash Singh from ICICI Securities. Vikash, would you like to please go ahead?
Yeah. Thank you. Good afternoon, sir, and thank you for the opportunity. First of all, congratulations on a very good set of numbers. Sir, just wanted to understand that our two years guidance of roughly about INR 4,000 crore of top line, we need to exit this year with a pretty hefty order book because our execution timelines are usually 15, 16 month kind of a thing. So next 5-6 months, what kind of order winning pipeline you are envisaging at this point of time? And does the counter-drone system also include in that thought process?
The thing is, what we have started doing is we are saying that it's very difficult to predict how much turnover we'll be doing in the next one year or next two years or something. What we are very sure about is ability to execute the order that we have already got. So, that INR 4,000 crore that we made for the two financial years was based on the government processing the orders and we getting the orders in hand. So we expect those things to happen, but we don't know when they will happen. So, there may be some delay in the placement of orders. Once the orders are placed, we will feel very, very sure about execution, and it included both simulators and counter-drone systems. But as we are seeing, there are some delays which are happening.
But again, once our order book builds up, typically the FTP needs to be concluded by March 31, and if we have good order book by then, we should be able to achieve what we have set out to do. But again, look at the order book more than anything else.
Noted, sir. My second question pertains to our longer term strategy. As we have seen in the last two years, we have acquired a lot of companies, building different, collaborating them into a certain kind of the capability infrastructure. However, our recent acquisition doesn't seem to fit the match of the drones or your simulation kind of the thing. Just wanted to understand going forward, are we going to explore in a non-related segment as well, just to build up our capabilities for diversification purpose? This new acquisition which you have taken, if I'm not wrong, is largely related to tank guidance, et cetera, related. If you could give us some more insight on your strategy through our acquisition-led buildup.
Actually, the strategy that Zen has is this, that you're absolutely right that the first thing is the simulation segment that we want to do. We acquired a company, ARI, which was into adjacent for the naval simulation, and we acquired that. Then we, of course, EW, we had UTS, our counter-drone systems we started. Then we acquired AiTuring, then we acquired Vector. All connected companies. Your question was this acquisition of Cogknit, where does it actually come in that? The strategy of Zen is this, that we are assuming that there are some Pareto technologies that we really need to get grip on for if India has to become unbeatable in war. We have identified certain technologies, and out of them, command and control is one such area that we really think is going to go.
In addition to space is another area that we think is going to play a very, very big role. Another product that you seemingly is even though connected with robotics and automation, which through Bhairav Robotics we are doing. These are all connected in the sense that the question that we ask is this a Pareto technology that will really, really impact which Again, when I say Pareto, I mean 20% of the technologies that will have 80% of the outcome in the war. For example, we say that Israel-Iran war was won by the Shahed drone. This is almost 0.1% of the equipment, won 99% of the war. What are those technologies that we need to focus on as we go into the future?
This, again, Cogknit is a— I do not know if you just do some Google search on Cogknit, they are one of the most advanced guys in AI. They have done a lot of work in AI. They have done this command and control stuff, which is absolutely cutting edge. I think the work that they are doing is not only applicable to India, but worldwide. How do you become aware of where your tank is in a war? Actually, almost all the older tanks do not have that facility to be aware where they are in a war. These guys have developed the technology, and this can be scaled across other, the infantry and the AD, et cetera. I think what they have is, we really, really feel that it is one of the best acquisitions that we have done.
We think that as we go ahead, at least five years from now, this should be a significant contributor of our revenues to our portfolio. Again, they are all connected in the sense, these people use sensors to sense and get a common, stitch up a picture, which can be used across board for our other simulators also, including simulators.
Noted, sir. Thank you and all the best for future.
Thank you, Vikash.
Thank you. Moving to our next participant, we have Mr. Dipen Vakil of PhillipCapital. Dipen, please go ahead.
Hi, sir. Thank you for the opportunity, and congratulations on a great set of execution. My first question is, I wanted to understand, you have been looking at your export market as well as increasing your international presence. Can you throw some light as to how that is moving and when it will start contributing significantly to the revenue, and where is the U.S., so expansion into U.S. that we were looking at?
Yeah. Again, the exports market, there were some discussions going on, but this war is actually kind of putting a dampener on that. There is almost on the verge of signing or very advanced stage of negotiation, but the Iran-Israel war has caused some gaps there. But I think overall, we do expect some orders to come through in the next few months in exports area, and not only from Middle East, but also CIS countries and probably Southeast Asia. These are the areas that we are focusing on. But again, I am not able to put a number there. Second is the USA. Again, the compliance, we are working very hard because it is one of the most difficult market to penetrate, the U.S. market. There are a lot of compliances to do, so we are undergoing the process of meeting those compliances.
Of course, we are also looking at collaborating with primes, where we can cooperate with the prime and within the legal framework of the U.S. defense, how much of value add can we do from India? Of course, we would like to meet the requirements to do it in U.S. also. But as we speak, we are talking to a couple of big primes, and we expect something to happen probably next year in this regard.
Got it, sir. Sir, any traction coming in from Europe, especially for anti-drone system side of it, considering the entire rearmament process that is going on over there?
Again, Europe is also, they have been insisting that it should be a Europe-made product, and they have a regulation. There is a procurement called SAFE that is happening, and the requirement is 65% of the procurement should be local. That means it should remain in the economy. We are talking to some of the larger players in that field, where we are, how do we meet the requirement that is there? And we do expect it is in both the fields, not only C-UAS, but even in simulators, because they have not been really trained for the kind of equipment they will be dealing with. Fortunately, we make simulators for the Russian equipment, so they are very much interested in that part of that deal.
Both C-UAS and simulator are something that Europe is looking to, and I think we may be getting. We are talking to some people there and expect some positive developments to happen by next year at least, in the beginning of the next year.
Got it, sir. Sir, second question is mainly on, right now, whichever tenders that would be live or RFPs that would be going on, when do you expect some translation to happen? Do you think that it will happen in third quarter or more towards the fourth quarter when we will see some major contract signings or award winnings happening?
The earliest is fourth quarter, what I see. Some simulator order may come much. I think I have been saying that some about INR 400 crores worth of simulator orders are expected, but they are taking time to materialize, but they will happen much earlier. But the C-UAS, the FTP, the earliest they will happen in the fourth quarter. But if for some reason, if they do not conclude the FTP process, which is typically the scheduled deadline is March 31st, that may spill over into the first or maybe worst case, second quarter also. But it has never really gone beyond the second quarter. So I think, but typically, if they were to stick to their deadlines, we should have the orders by the Q4.
Got it, sir. That is helpful, sir. Thank you so much and all the best for second half.
Thanks, sir.
Thank you, Dipen. Moving to our next participant. We have Abhijeet Singh of Systematix. Abhijeet, please go ahead. Sorry, please unmute your microphone and go ahead with your question. We are unable to hear you now.
Yeah. Am I audible?
Yes, please.
Sir, thank you for the opportunity, and congratulations on a very strong set of results. Just wanted to understand what led to such strong execution in Q2. I think we have reported our highest-ever quarterly revenue. That is a very positive sign. What is the execution? I mean, if you can talk about the product, some color on that, what led to this kind of strong execution in Q2?
I think one thing we have done is extreme streamlining of the operations themselves. We have today, I think, even if we were to double the size of the orders to be executed, we should be able to execute also easily. I think the systems have been streamlined. We have now extreme visibility. Where are we stuck? We know, identify the bottlenecks. The execution has really, really increased the thing. Second was, there was some gap in the Q1 that also was spilled over into the Q2. I think that also kind of helped in getting this good numbers. But we expect H2 also to be reasonably good. Again, I think the credit should go to the operations team. They have really installed new process and procedures in the whole system by which we are able to, I would say, almost effortlessly executing and getting this.
When we expect the Q2 to be also very heavy, we don't think any challenge in execution. I think that's actually a good thumbs up to the operations team.
Okay, sir. What would be the quantum of that revenue that got deferred in Q2?
No, no. Q1 to Q2, there was some deferment, but no deferment in Q2. I think we executed whatever was promised in Q2.
Sir, in terms of our capability in C-UAS category, sir, what is, let's say if there are tenders of INR 100, how many tenders do we generally participate in from whatever product capability that we have right now?
So the question, I will reframe the question. Are there any categories of C-UAS that we do not bid for? Yes, there are very low-end, some very low-end counter-drone system we do not bid for. For example, there is a gun just for individual shops or something, or farmhouses. We do not make that kind of a thing. We make for the Indian Armed Forces. I think, I would say almost 70%-80% of the market would be addressable by us. But again, within that, what kind of capabilities do they ask for? We really, really build very, very high-end, made for war kind of counter-drone systems. Typically, we have instruction that we want to make counter-drone system for war, not for winning a particular tender.
Zen was the first company, probably one of the very, very one or two companies in the world to make a similar counter-drone system that could jam wideband incoming drones. Everybody who made counter-drone system for commercial drones, and we said, "Listen, if a terrorist or enemy were to attack, they will not follow your commercial frequency guidelines." Exactly that is what turned out in Operation Sindoor, and we were able to effectively do it. We are doing many other things. Obviously, cannot disclose everything, but we are doing many other things which are actually meant to defend India in a war, and be successfully avoiding any kind of damage. If the government, if the tenders come with those real war specs, we will win substantial part of that.
But if for some reason, the specs are not very stringent, maybe there will be other people who will win some of the contracts. But the whole game is that we are really making our systems for India to be really, really impenetrable.
I think last time I met Hari sir, I think he mentioned about INR 150 billion of TAM over the next 2-3 years for C-UAS. That number still stands for us?
INR 150 billion, I mean, that's a very huge number, but I would say, yeah, definitely the market is growing, extremely growing at this point in time, and the world market is very, very huge. We are actually, as we speak, we have started talking to some foreign countries also. But again, as you know, a couple of years back, we won an order in this regard, and we expect some more orders to come through. But the exports have been little slow in this regard, in the regard of C-UAS. But again, from what the feedback we're getting from the Indian Armed Forces is that these systems are working in very, very high altitude and very, very successfully. In fact, this was the recent feedback, and we are very happy that the Armed Forces are really, really satisfied with what we have supplied.
I think we should get, based on what the feedback that we are getting from customer, they are very happy, and we should get really good orders from them, even when the FTP process happens.
Lastly, on the command and control side of C-UAS, how much of it are we outsourcing, and how much of it can we do in-house for the command and control of C-UAS?
The whole system, whether it is the detector, whether it is the radar, whether it is the jammer, whether it is the EO, the camera, whether it is the remote control weapon station, everything, and of course, everything that stitches together the command and control, is completely homegrown, completely 100% owned by Zen and their subsidiaries. There is nothing that is outsourced in this. The command and control center is ours, and it's working very effectively. As we speak, there are a lot of improvements going on. There is a big team sitting to make all these things AI native. As we speak, we are trying to make them AI native. I think the product that the Armed Forces see from three months from now, six months from now, will be completely different from what they are seeing today.
Thank you so much, sir, and I'll get back in queue.
Thanks, Abhijeet.
Thank you. We'll take our next question. We have Jatin Jadhav of Sahasrar Capital. Jatin, you can unmute your microphone now. Yes.
Hello, am I audible?
Yes, please.
First of all, congratulations on a good set of numbers, and thank you for the opportunity. Most of my questions have been answered, but out of curiosity, I just wanted to know, since the entire Counter-Unmanned Aerial System, radar is a very important component of it. So, in the entire radar system, do we manufacture and own the entire design architecture of master clocks, RF synchronizer, Butler matrix, and the sub-components? That is my first question.
Yeah, so this is 100% the radars, and we are making, including ASR radars, all are being made in-house. One of the subsidiary, UTS, is actually iDEX project winner for that, and they are building it, and it is actually working. They built way ahead of the time. But the original radars were also built by us. Everything, all the algorithms have been developed by us. As we speak, we are trying to improve those algorithms to give us better results. Yeah, so to your question, is the radar completely in-house developed and designed and developed and manufactured? The answer is yes.
Got it, sir. Got it. Sir, on my second question, the acquisition on Cogknit, I have actually met the promoters, and they are very passionate people, and I actually very like the company. So, I believe it is a very good add-on for the Zen bouquet. When can we see a smaller Counter-Unmanned Aerial System for the tanks? Because that will be the natural progression, I assume. Many companies are definitely working on it.
Yeah, tanks, I think the counter-drone system for the tank is very, very important. Even at the infantry level, they will be required. Yes, I think the team is busy with meeting the requirements of the Armoured Corps and developing a counter-drone system for tanks also. Yeah, we are in the race for that.
Are we seeing some good traction from the army side also for this, or good interest?
No, absolutely. All the tanks are sitting ducks if they do not have counter-drone systems. A small drone can come and destroy a tank. They are very, very seized of the matter. Our Indian Armed Forces are one of the most futuristic and smartest people that we know of, so they are absolutely on track with that now, so we do not have to worry about that. Yeah.
Got it, sir. Thank you so much, and all the best.
Thank you, Jatin.
Thank you. Moving to our next participant. We have Nipun Sharma of VLS Finance. Nipun, please go ahead.
Good evening. Am I audible on your end?
Yes, we can hear you.
Okay. First of all, a hearty congratulations on good set of results. My question being that in this quarter, you earned a very good amount of revenue. Will this be continued for the upcoming quarters? As you know, you have been earning good amount of orders in the last second half of FY 2026, as well as your trade receivables and inventories have also risen up by almost 2x- 2.5 x. Considering this, do you think that the next upcoming quarters will be generating the same amount of revenue?
Based on what we have, again, I was saying that we have an order book that we need to execute. I think the next couple of quarters should be healthy, is what my expectation is, based on the order book that we have. With respect to the orders, again, we are reasonably sure about some simulator orders, about INR 400 plus crores. But with respect to counter-drone systems, we are not so sure, because that's a process that is taking time. If the government acts fast, I think we should be getting those orders also. But yeah, I think revenues look reasonably assured of, and orders, we'll have to wait and see for non-simulator products.
Okay, understood. Talking about this, do the Fast Track Procurement orders are still in place for you, or is the government placing the normal orders, the regular procurement right now?
Both are going on at this point in time. FTP is to, they have to start publishing the RFPs and actually go for the process. But the old acquisitions that were happening, those are the orders that we have got till now. Those are happening in parallel. Again, FTP, as I said, we expect the RFPs to come in the next few weeks, actually, if not months.
Okay. Considering you still have FTPs as your orders as of now, I understand that you would not be able to comment upon the yearly revenue guidance. Still, sir, as I have heard from your third quarter FY 2026 con calls, as well as for quarter four as well, you are targeting INR 4,000 crores for the upcoming financial years as a revenue. As one participant asked you and assured you said that it is expected that you might earn INR 1,500 crores in FY 2027 and INR 2,500 crores in FY 2028. If the order book position by the end of FY 2027 is around INR 2,500 crores-INR 3,000 crores, is the guidance in place or is there some slight changes in the guidance?
I think we should be able to guide better as the order book improves. Closer to Q4, we will be able to probably be able to say that of the orders that we have, how much we will be able to execute. At this point in time, we are not able to say what will be the turnover next year. But I think if the order book, as you said, if it is INR 3,000 crores or something, probably it should be a good ground for us to give very good numbers.
Okay. I guess last quarter you guided for INR 2,500 crores at the end of FY 2027. Is that guidance still in place? The order book.
What has happened is that I have been prohibited by the board to make any predictions because after my predictions, astrologers are looking good. I stopped predicting now completely. Yeah, I think, again, the ability to execute is there. We get the order book, and we will execute it. To be fair, the government also has lot of process and procedure to be followed, and that is why it is getting delayed. We expect that government will accelerate the procurement, and our order book position should be very well padded so that we can achieve not only the numbers we have promised, maybe more than that.
Okay, understood. My last question is that, do you see any signs of temporary deferment in the upcoming quarters?
Sorry, I did not understand your question. What do you mean by temporary deferment?
Deferment as in that was witnessed in first quarter of FY 2027. Do you see any sort of deferment in the upcoming quarters?
Of the order book execution?
Yes, sir.
Yeah, I think we are reasonably confident that the orders that are there will be executed. I, at least, do not foresee any deferment or delays in execution of the orders at this point in time.
Okay, sir. Thank you very much and all the best for your future endeavors.
Thank you, Nipun. Thank you so much.
Thank you. Taking our next question now, we have Vidyad har of Sohum Asset Managers Private Limited. Please go ahead with your question, Vidyad har.
Thank you. My first question is that, you have much better color or clarity on the current year. Do you expect revenue to be in the range of INR 1,200 crore-INR 1,300 crore, which I think you had guided earlier this year for 2027?
Sorry, how many crores did you say?
INR 1,200 crore-INR 1,300 crore.
Yeah. I think, again, I think we should be able to achieve a little more than that number. But yeah, we are comfortable with that number, very easily to achieve that number.
Okay. My second question is that, you seem to be optimistic to receive up to your order book to be about INR 2,500 crores- INR 3,000 crores in March 2027. What would be the new orders which you are likely to get by March 2027? If you could give us some color on that.
No. First of all, I am not very sure at all that the orders book will be at INR 2,500- INR 3,000 crores. What I did say was that if the FTPs are concluded, there is a possibility that we will get some orders. I am not putting a number to that. If those numbers do come in, we should be able to execute it in the next 12-18 months. Whenever the orders come through, our execution time has typically been 12-18 months. You look at the order book position, and you should be able to guess. Typically, you should be able to guess that what will be the turnover based on the equipment orders we have at any point in time.
Let's not say March 2027, but even if orders are delayed over the next, say, 6-9 months or a little longer, which are the orders you hope you are likely to get?
I think it is majorly going to be counter-drone systems.
Okay. That will be the bulk of the new orders, is it? Plus, I think the simulator you have been talking of INR 400 crores. That-
Yes, that is right.
My last question is on this HyperStrike. If you could give us some update on what is happening there. Do you expect to get some orders either this year or next year in that and your plans regarding
We expect the product is undergoing internal trials at this point in time. We expect definitely some significant contribution to happen by the next year from HyperStrike.
Thank you.
Thank you, Vidyad har. Thank you.
Thank you so much. We will take our next question now. We have Sohan Joshi of ASC Consultants. Sohan, please go ahead.
Hello?
Yes.
Congratulations for great execution. My first question is, how are we seeing the traction from the Middle East? Because in the recent West Asia war, a lot of the critical assets like, say, oil refineries or, say, airports have been targeted. Do we see any Fast Track P rocurement from the Middle East side to protect those vital assets for the counter-drone systems?
We are in talks with some of the Middle East governments, and especially those friendly to us. But it's strange that there is not a sense of that urgency with them, that they are spending abnormally high amount of money to protect the assets, as we call, but very bad arithmetic of, they send a $20,000 Shahed, and these people are spending $4 million to block it. But yeah, the arithmetic also. But again, we have been talking to them, but strangely, no orders have come through to us, and there is nothing in advanced stage with the Middle East governments at this point in time.
Okay, sir. My second question is with regards to the FTP. Let's say the FTP gets spillover to the next year, let's say Q1. Since we have improved our execution cycle, even if it gets spillover to the next year, will we be able to execute the entire FTP in the next year itself so that we can achieve a target of INR 4,000 crores cumulative?
Definitely what we would executed two years back to now is significantly improved. Your question is, I'm thinking 12 months to 18 months. If we get it in September, will we be able to execute something by the next six months? Maybe some part of it can be executed, and I think execution definitely speed has increased. Some part of it, if it's in Q1, definitely some part will be executed. So maybe a major part of it will be executed. But if it is Q2, we start getting the orders, maybe lesser part will be executed. But all those orders will be executed within the next 12 to maybe most probably within the 12 months, but maybe spillover little couple of months beyond that. But you're right in the sense that even if you get the orders late, we now have the capability to execute faster.
One last question. Out of the financial numbers, the modern warfare has seen a lot of attacks through drones. How are we seeing the seriousness from the government to protect, apart from the border areas, let's say, Golden Temple, which was a threat during the Operation Sindoor, to protect all those assets? Are the government seeing to deploy the counter-drone systems in the other parts of the country as well, apart from the border areas?
Yes, they are trying to protect key installations, and yeah, there is effort, and we are aware of those efforts, and government is really, really seized of the matter. Yes, to your question, the government is not only thinking about the border, but even about the key infrastructure projects, key installations. Yes, they are. In fact, we are interacting with a few of the customers in this regard.
Thank you, sir. That's it from my side. All the best for the upcoming quarters.
Thank you, Sohan. Thank you so much.
Thank you. We will take our next question. We have Dhaval Yadav of IVIK Securities. Please unmute your microphone. Yes, Dhaval, please go ahead with your question. Sorry, Dhaval, we are unable to hear you. We do not have a response from Dhaval. Moving to our next participant, we have Smita Mohta of Samriddhi. Smita, please go ahead.
Yeah, am I audible?
Yes.
Okay. So, a few questions I wanted to ask Mr. Ashok Atluri, sir, that he was saying that the naval acquisition that he had made, which was a Hyderabad or a Bengaluru-based company, which he had done earlier, and for that, we were very gung-ho about the same, that it was a technology which nobody other than Zen had acquired, and they would have a very good opportunity to have good order book from them. So, I wanted an update on the same. What is the update there on that acquisition? And what about the patent and the licensing? Have we got any new patents and licensing done? And third of all, what about the CapEx for the next year that we are expecting to do? So this is all my questions for Mr. Ashok Atluri, sir.
Thanks, Smita. Thanks for asking. The naval acquisitions, we had two acquisitions in Navy. One was ARI, which was a major acquisition, and the other was Anawave. So these two acquisitions together, we got a complete suite of naval, of course, they were merchant navy simulators, but marine simulators, but we are able to now completely transform them as naval simulators. So this is a new market that has completely opened up for them and for us together. Anawave has some very, very rare simulators like submarine simulators, fast craft simulators, et cetera. So together, we are actually offering something called as a Combat Training Node for navy. So naval CTCs, we call them. So this is a big, big ticket item that we have started talking to various navies in the world.
So, again, order is yet to come, but there's a lot of interest, especially with sudden shift to the choke points, the training that is required, how to overcome, how do you handle sea mines. All these things have become really, really important. How do you actually handle threat of a drone? The counter-drone simulator on a naval ships have become very important. So this, I think, is growing really, really big as we speak in terms of the pipeline at a very, very top level. So I think that we are very positive about that in the next 3-4 years, it's going to grow really big. With respect to the patents and licensing, we keep applying. We have applied for more than 235 patents, and every month, actually, we used to do a press announcement.
Now we have stopped doing press announcements for patent grants because it's almost like every 10 days we're getting one patent. I think we are worried that there will be investor fatigue with these announcements. They come down a little late, but we probably will make a consolidated announcement with respect to that. With respect to the CapEx, again, CapEx, we have one is CapEx towards the actual infrastructure that we need to have. Second is the R&D that we do. But I'll ask the CFO to talk about the CapEx for the next year so that he has the figures on his fingertips here.
Smita, for this financial year, which is FY 2027, we budgeted to do around INR 150 crores of CapEx. For next financial year, which is FY 2028, also we budgeted a similar amount of CapEx to be done.
Okay. Next, I wanted to ask that out of this INR 995 crores of order book that we have, which is, sir said that they will be able to do it in the next six months. So out of this INR 995 crore, how much of the, is there a potential for the order book to be consumed and the orders to be executed?
You mean this financial year or?
Yes, this financial year till March.
Again, like we answered one of the earlier participants, INR 1,200 crore-INR 1,300 crore is what we are comfortable as a top line for this financial year. We have already done INR 485 crore, so the remaining should be done in the next two quarters.
Okay. You were talking about margins, sir, that your margins will be approximate near around 30% or so.
35%.
Yeah, 35%. So what I am seeing is that from 48%, you are continuously downgrading the margins part. Is it like, was that 48% was one of a kind order book post your Operation Sindoor, this thing? Or like you are comfortable constantly going in at the near around 30%- 35% margin band?
No, we've always guided long term it will be around 35%. That is the long term margin guidance that we've given to our investors. And usually the margin keeps varying based on the mix between ADS and simulators. So ADS usually have a higher margin profile. So as the product mix changes, so last year, I think you're referring to the last year 48% that we achieved. That is primarily because last year we had a more favorable mix towards the simulator products. As the mix keeps changing, that's why we've guided a long term margin of 35%.
Got it. So looking at constantly that we saw this kind of a backfire on the water, especially near around the Indian Ocean and all of that, where we had a missile attack from Iran and all. So how serious is our government on manning the seaport side, which is the Arabian Sea and all of that, which falls into a lucrative position whereby we can help them because of that, the navy simulator and all. Are we not seeing any traction by the government in this to restrict attacks there?
I think, I'm not aware of Iran attacking India at all, and this is a strange news to me. But overall, the government of-
Not India, it was that base of U.S. which they attacked, no? Iran in that.
Oh, yeah. I mean, yeah, that I think they have again stated even recently, yesterday or today, they have again said that everything is a fair target. Yeah, so definitely the government of India has shifted. Earlier it used to be just the eastern border, but now we are thinking about east, west, much beyond that. Now we are looking at the whole peninsula that is the Indian Ocean now in a very, very serious way. The assets are being created for that. Of course, we are also focusing on all the naval simulators in that. We are trying to get into more deeper technology into naval products also, not only simulators. As we go into the future, we will be announcing that again. The thing is, we are focusing on, is this a Pareto technology that will determine the future of the war or not?
If it is a Pareto technology, we think, can we build world's best product in that regard in this particular space? If the answer is yes, we will make the bet on that. But yeah, the government of India is very, very serious about these threats that are being faced, and they want to get trained on that and also build enough protection to ensure that we do not get damaged if and when the war happens.
Thank you, sir, and all the best for H2 FY 2027.
Thank you, Smita.
Thank you. We will take our next question. We have Bhavya Gandhi of Bajaj Alternate Investments. Bhavya, please go ahead.
Yeah, hi. Thanks for the opportunity. Sir, just wanted to understand on the HyperStrike interceptor, is there any orders at this point in time in the order book, or will it be more like an FY 2028, 2029 phenomena? And how big this opportunity could be, if you can just quantify this as well?
Sorry.
On HyperStrike, currently there is nothing in the order book like we discussed in the question for one of the earlier participants. We expect the revenue from HyperStrike to come starting FY 2028. The capacity that we are building currently for HyperStrike is close to 15,000 units per month. And once, obviously, we will do a phased execution, there will be a slow ramp-up in production. But once the entire production is ramped up, the capacity we are building is 180,000 units per annum. At an average price that we are assuming is around $10,000 itself, the capacity we are building is close to a billion and a half dollars worth of capacity. But again, the ramp will be slow during FY 2028. We should see majority of the orders coming through in FY 2029.
I didn't get it. You said 10,000 dollars per piece, and you are building a capacity of 180,000. Is that the right understanding?
That is correct.
180,000 per annum?
Per annum.
Okay. Fair enough. This will flow through in FY 2028, post 2028?
Not the whole thing, like I said, Bhavya . There will be a slow ramp-up. The initial plan is to start off with around 600 units per month and then ramp up to the full capacity. The 15,000 units per month that we told you is on three shifts. Again, the capacity depends on the order inflows and all. But like I said, around FY 2028, 2029, in FY 2028, you should see the first order, and the ramp-up should happen in FY 2029.
Got it. Second question, I think slightly you have answered it earlier, but just wanted some clarity on this. I think around March 31, 2026, our order book was closer to INR 1,336 crores. Of that, we were supposed to deliver INR 1,000 crores of equipment in Q2 and Q3, whereas in Q2, you have already done closer to INR 345 crores, right? So, can we assume that closer to INR 600 crores- INR 700 crores will be the execution in Q3?
So, like I answered for one of the earlier participants, we said the full year will be between INR 1,200 crores- INR 1,300 crores. We have done INR 485 crores in the first half, so the remaining should be executed spread over Q3 and Q4.
Okay, fair enough. On the order visibility, I know Ashokji alluded that you have built on the execution, orders will come through. But slightly, if at all, you can provide some sort of delayed, what could be the maximum delayed when you can see this order inflows coming in to reach the INR 4,000 crore top-line guidance that you had given earlier? Worst case, you believe in your experience.
For the FTP orders, we have seen that they have spilled over to Q2. That is the best I can do in this regard. We will try to execute whatever we get the orders, as the execution capability has significantly got improved. So, we will try to execute whatever we can in the next seven to eight months once we get the orders, and the rest will spill into FY 2028.
Okay, fair enough. Thank you, sir. That is it from me. Thank you.
Thank you. Ladies and gentlemen, due to paucity of time, we will take this as the last question. I will now hand it over back to Mr. Ashok Atluri for his closing remarks. Over to you, sir.
Yeah. Thank you, everyone, for your questions. Again, very broadly, we think that we will be doing very well in this year as the execution capabilities have gone up. Whatever orders that we have are not very difficult orders to execute. We are also looking at the upcoming FTP, the Fast Track Procurement, and we are pretty excited that we have a large scope to get large amount of orders there. Second is that, as somebody asked a question about Europe and America, I think in the long term, these are going to be really, really good and interesting markets for us. If we get a crack there, that could be a very, very pleasant, positive black swan for us. We are looking forward to those. The R&D team is really, really busy developing some cutting-edge technologies.
Again, the technology, whatever products that we are working on are not just made for the best Indian product, but they are aimed to be the best world products. As they say, there are no runners-up in war, so we do not want to create a product that is second best in the world, so it has to be the best in the world. With that, I would like to thank you for supporting us and wish you a happy Diwali.
Thank you. On behalf of Zen Technologies Limited, that concludes today's conference call. Thank you all for joining us, and you may now click on the leave icon to exit the meeting. Thank you for your participation.