This sounds concerning if indeed there is no proprietary knowledge in the anti-drone solutions that Zen is providing. Hopefully someone can ask this question to the management in the next conference call because the management is expecting a lot from their anti-drone segment.

Pidilite Industries Limited Q3 FY24 Earnings Conference Call January 24, 2024

• Export demand remained strong and delivered double-digit

• Domestic subsidiaries reported robust sales growth with both the Consumer and Bazaar and the B2B subsidiaries registering double-digit growth

• Institutional demand for waterproofing has jumped because of the infrastructure investments

• The 4-year CAGR, as far as volume growth is concerned, will be close to again, if I see, exactly 12% to 12.5%.

An insightful article on the company Zen Technologies Ltd.
https://www.thryvv.in/article/zen-technologies-ltd-a-defence-company-worth-looking-at/

KEY HIGHLIGHTS FROM THE CON CALL FOR Q3 :

Positive Points:

1. MapmyIndia achieved a significant milestone of surpassing INR 100 crores in quarterly total income for the first time, marking a substantial growth trajectory.
2. Q3 FY’24 revenue reached an all-time high of INR 92 crores, exhibiting a remarkable 36% year-on-year growth.
3. EBITDA in Q3 FY’24 surged by 38% to INR 38.6 crores, with a robust year-to-date growth of 32% to INR 116.6 crores, reflecting strong financial performance.
4. Year-to-date PAT stood at a robust INR 96.2 crores, showcasing a 21% year-on-year growth, with a PAT margin of 32%.
5. The company demonstrated resilience and maintained a healthy cash reserve of INR 516.1 crores despite dividend payouts.
6. Continuous improvement in IoT-led EBITDA margins from 6.3% in Q1 to 10% in Q3 indicates effective execution of the IoT business strategy.
7. Drone Business Potential: The company sees significant potential in its drone business, highlighting recurring revenue opportunities through continuous inspections and monitoring.
8. Upselling Opportunities: There are multiple upselling opportunities within the drone business, including additional services like analytics and software stack upsells, providing potential for revenue growth.
9. Strategic Investments: Investments in companies like KOGO and Indrones are seen as strategic moves to enhance the company’s ecosystem and capabilities, particularly in areas like AI-powered travel assistance and drone technology.
10. Strong User Engagement: The consumer mapping business, particularly the Mappls App, has shown strong user engagement, indicating potential for growth and revenue generation.
11. Customer Retention: The company boasts high customer retention rates, particularly in the automotive sector, which provides a stable revenue stream.

Negative Points:

1. The clarification regarding EBITDA calculations raised concerns about transparency and accuracy in financial reporting.

2. The significant increase in marketing and business promotion expenses from INR 20-25 crores to INR 50 crores in Q3 raises questions about cost management strategies.

3. Despite promising growth prospects, the revenue contribution from consumer advertisement income remains relatively small and uncertain.

4. The uncertainty surrounding the exact revenue share from EVs in the auto segment raises concerns about diversification strategies and market penetration.

5. While engagement with the government for digital transformation initiatives is positive, the revenue contribution from government contracts remains limited and highly selective, ranging between 5% to 10%.

6. Early Stage Deployment: Despite potential, the drone business is still in early stages with certain customers, indicating a longer timeline for revenue realization.

7. Monetization Uncertainty: There’s uncertainty regarding how the drone business revenue is being monetized, with a mix of hardware sales, service provisions, and solution integrations, potentially leading to complexities in revenue forecasting.

8. Marketing Expense Impact: Additional marketing expenses have been absorbed in the Map-led segment, potentially impacting short-term profitability.

9. Hardware Revenue Stagnation: Hardware revenue in the IoT segment has remained flat over the last few quarters, signaling a need for reassessment of sales strategies to drive growth.

10. QIP Status: The planned Qualified Institutional Placement (QIP) is still pending execution, which may affect the company’s ability to raise capital for future growth initiatives.

Yes. But out of 1400cr order book, ~650 cr is antidrones which seems like a commodity play since it’s import, assemble and sell.