Zen Technologies: When the theme is hot, but the numbers are not

Subscribe to enjoy similar stories. India’s focus on defence has sharpened steadily over the past few years. Operation Sindoor in May brought renewed attention to the country’s defence capabilities and strengthened the outlook for domestic defence manufacturers.

After clocking 11% and 14% CAGR growth between FY19 and FY25, India’s defence production and exports are projected to expand at a much faster 19–20% CAGR between FY25 and FY29. Markets have clearly bought into this optimism. The Nifty India Defence Index has delivered a blistering 54% CAGR over the past five years, far outpacing the broader Nifty 50’s 13% CAGR over the same period.

Within the broader defence umbrella, drones have emerged as a key growth theme. The war in Ukraine has underscored the increasing role of unmanned aerial vehicles in modern warfare. Beyond military use, drones are finding applications in public safety, disaster relief, law enforcement and agriculture.

Policy support has followed. The Drone Rules 2021 simplified licensing and approvals through the Digital Sky platform, while GST rates on military and commercial drones were slashed to 0% and 5%, respectively. Yet, despite the narrative momentum, listed investment options in the drone space remain limited.

Defence heavyweights such as HAL and BEL have minimal exposure, while pure-play names like ideaForge have slipped into losses amid intensifying competition. Zen Technologies stands out as one of the few listed companies with meaningful drone exposure alongside relatively strong financials. Its stock has delivered a 73% CAGR over the past five years, outperforming even the defence index.