AXISCADES Technologies Q1 FY27 earnings call

AXISCADES Technologies Limited reported its highest-ever consolidated revenue of 346 crores in Q1 FY27, marking a 42% YoY and 27% QoQ increase. Despite this growth, the company recorded a reported PAT loss of 14.8 crores, primarily due to one-off^📎 costs associated with its strategic divestment. These costs included a 13.1 crore provision (9.62 crores for aged defense receivables and 3.5 crores hedge provision) and a 21.81 crore transaction cost related to the divestment. Normalized for^📎 these items, EBITDA stood at 41 crores with an 11.8% margin, and PAT at 20.2 crores.

The company is actively divesting its Engineering Services and Aerospace Services businesses to Akkodis for approximately 2,256 crores (US$237 million). Phase 1, expected to yield 190 crores post-tax cash, is targeted for closure by August 31st, with Phase 2 (525 crores cash) by November 30th. This strategic move aims to transform the company from a services-focused model to a product and solutions company, utilizing the 920 crores in proceeds to fund future growth and acquisitions without equity dilution.

The retained business, excluding divested units, demonstrated robust growth, increasing 94% YoY to 183 crores. The Defense business was a key driver, delivering a record 125 crores in revenue, up 112% YoY, with an underlying EBITDA of 13 crores (up 15% YoY). The XiDA (formerly ESAI) business, now headquartered in the US, also performed strongly with 49.5 crores in revenue and a 30% EBITDA margin (14.7 crores EBITDA). Aerospace manufacturing, a new focus area, recorded 6.1 crores in revenue, though its EBITDA was negative due to upfront investments.

AXISCADES has signed a non-binding offer for an AS9100 certified precision manufacturing company, expected to close in Q2 FY27, which will add an annualized 180 crores revenue and 39 crores EBITDA. The XiDA business transfer is also anticipated to complete this quarter. The company is evaluating a second aerospace acquisition for Q4 FY27 and has several more acquisitions in its pipeline, with two expected to close within the next two quarters. These acquisitions are crucial for achieving the Power 930 vision and replacing divested revenues.

Significant investments are being made in infrastructure, including the fully functional Devanahalli AeroLand Complex and the under-development Devanahalli Atmanirbhar Complex (20-acre plot) for aerospace, defense, and space manufacturing. Land for the Missile Atmanirbhar Complex in Hyderabad has been acquired, with groundbreaking in early July. The company reiterated its FY27 guidance of 1,377 crores revenue and 270 crores normalized EBITDA for continuing operations, targeting a PAT of approximately 135 crores, with a long-term goal of 960 crores PAT by FY30 under the Power 930 initiative.