Transcript

July 31, 2026 To To Listing Department Dept. of Corp. Services National Stock Exchange of India Limited BSE Limited Exchange Plaza, C-1, Block G, Phiroze Jeejeebhoy Towers Bandra Kurla Complex, Dalal Street Bandra (E), Mumbai – 400051 Mumbai- 400001 Symbol ID: ZENTEC Security Code: 533339 Dear Sir/Madam, Sub: Transcript of the Conference Call held on July 27, 2026 Pursuant to Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, please find enclosed the transcript of the earning conference call held on July 27, 2026. This is for your kind information and records. Thanking you Yours faithfully, For Zen Technologies Limited Sourav Dhar Company Secretary & Compliance Officer Encl: As above “Zen Technologies Limited Q1 FY2027 Earnings Conference Call” July 27, 2026 Management: Mr. Ashok Atluri – Chairman & Managing Director – Zen Technologies Limited Mr. Hari Haran Chalat – Chief Financial Officer – Zen Technologies Limited Ms. Abhilasha Atluri – Head of Investor Relations – Zen Technologies Limited Page 1 of 18 Zen Technologies Limited July 28, 2026 Moderator: Ladies and gentlemen, good day, and a warm welcome to Zen Technologies Limited’s Q1 FY2027 Earnings Conference Call. Please note all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the management’s opening remarks. Please note that this conference is being recorded. I now hand over the conference to Abhishek Mehra from TIL Advisors. Thank you and over to you! Abhishek Mehra: Welcome everyone and thank you for joining this Q1 FY2027 earnings conference call of Zen Technologies Limited. The results and investor updates have been e-mailed 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 of the quarter and 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 Q&A session. With that said, I will now hand over the call to Mr. Hari Haran Chalak. Over to you Sir! Hari Haran Chalat: Thank you, Abhishek. Good evening and a warm welcome to all. Thank you for joining us on our Q1 FY2027 earnings call. I will take you through our financial performance for the quarter ended June 30, 2026. Consolidated revenue for operations for Q1 FY2027 stood at Rs.141.6 Crores, compared with Rs.178.1 Crores in Q4 FY2026 and Rs.158.2 Crores in Q1 FY2026. As communicated in our Q4 FY2026 post earnings investors meeting, a significant portion of the current order book was secured from the second half of FY2026 and given a typical execution cycle of around 12 months, revenue for the year is expected to be weighted towards Q2 and Q3. Q1 has come in as we expected and we remain on track with our delivery schedules. Operational EBITDA for the quarter stood at Rs.38.7 Crores at an operational EBITDA margin of 27.3%, compared with 28.6% in Q4 FY2026 and 40.9% in Q1 FY2026. Profit after tax for the quarter stood at Rs.34.5 Crores at a PAT margin of 24.3% compared with Rs.31.5 Crores in Q4 FY2026 and Rs.47.8 Crores in Q1 FY2026. I would note that this quarter’s consolidated PAT includes a one-off exceptional loss of Rs.3.4 Crores relating to a fire incident at one of our subsidiaries in which certain inventory, which is adequately insured was damaged. Adjusted for this exceptional item, on a post-tax basis, profit after tax for the quarter would have been approximately Rs.37 Crores at a margin of approximately 26.1%. I would like to spend a moment on the margin movement this quarter. The margin for this quarter is lower than the guidance of 35% at the EBITDA level, largely due to negative operating leverage. A significant portion of our cost base, both at the standalone level and across the group, is fixed in nature. On a lower revenue base, this fixed cost absorption compresses the margins. As revenue picks up through the year, in line with our order book execution, this same operating leverage works in our favor. Importantly, our gross margin for Page 2 of 18 Zen Technologies Limited July 28, 2026 the quarter stood at 72.9%, broadly consistent both sequentially and year-on-year. This indicates that the profitability of our business has not changed structurally. The compression at the EBITDA level is largely a function of the operating leverage. Our fixed cost base being spread over lower revenue quarter and not a reflection of any change in the underlying economics of our products. On the year-on-year comparison specifically, I would add an important point of context. Q1 FY2026 benefited from the reversal of certain provisions created in FY2025, amounting to Rs.7.65 Crores that were no longer required. These provision releases had given Q1 FY2026 an additional margin measurement of approximately 5%. In addition, this quarter has seen an increase in warranty provisions of Rs.2.88 Crores and incremental R&D costs of Rs.4.25 Crores. On a sequential basis, our margin of 27.3% is broadly in line with the 28.6% in Q4 FY2026, reflecting a stable underlying run rate. Taking these points together, I want to affirm that the margin this quarter is a function of revenue timing and operating leverage, not of any structural change in the profitability of the business. As revenue scales through the year, we expect margins to recover and to end FY2027 with a full year operational EBITDA margin in the mid-30s, in line with our guidance. Now coming to the order book. The consolidated order book stood at Rs.1239 Crores as of June 30,2026, comprising an equipment order book of Rs.920.6 Crores and an AMC order book of Rs.318.4 Crores. I want to address the movement in the order book directly. During the quarter, we executed Rs.141.6 Crores of orders and secured Rs.44.6 Crores of new orders, resulting in a net reduction over the March position. Subsequent to the quarter end, we received a further order of Rs.177.5 Crores from the Ministry of Defense for the upgradation and integration of the tank and crew gunnery simulators. Our pipeline of opportunities across counter and training systems remains strong. On working capital, a consolidated working capital cycle stood at 257 days as of June 30, 2026. The increase over the year-end position is primarily driven by a buildup in advance to suppliers and inventory, both of which reflect the procurement and production activity currently underway to execute the order book for delivery through FY2027. Debtor days remained stable at 122 days. On the balance sheet, the liquidity position of the group remains strong with cash and bank balances of approximately Rs.1217 Crores as of June 30, 2026 and the group remains debt free. This is the brief on our financial performance for the quarter. We can now take questions. Thank you. Moderator: Thank you so much, Sir. 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 questions as brief as possible and precise as possible. We will wait for a few minutes until the question queue assembles. Ladies and gentlemen, please stay connected. We will wait until the question queue assembles. Requesting participants to click on the raise hand icon from the participants tab on your screen. We are taking our first question now from Bala Murali Krishna of Oman Investment. Bala, please go ahead. Page 3 of 18 Zen Technologies Limited July 28, 2026 Bala Murali Krishna: Good evening here. So, the first question is on the margins only. So, Y-o-Y deep in the margins, even the revenue. So, if you see that the revenue, if t [Showing first 8,000 characters — download PDF for full document]