C2C Advanced Q2 FY26 earnings call

C2C Advanced Systems Limited positions itself as a pure-play technology company rooted in people, inspired by innovation, and committed to excellence. The company emphasizes its 25 years of experience in the defence space and its focus on building foundational software in India. Management highlights its IP-driven model, where software is developed for repeated application, and its strategy of fostering entrepreneurship within the company, with each leadership group acting as a P&L leader. The company aims to be a global leader in software-first defence and industrial innovation, believing that innovation is key for India's global standing.

The company has developed proprietary platforms like MAGI (C5ISR) for defence and MAGI CIX for industrial applications, which integrate various sensors and provide a common operating picture. They build combat management systems, integrated platform management systems, counter-drone systems, and ship stability software, all tried and tested in the field. C2C Advanced Systems focuses on software-driven solutions, using hardware but ensuring the software is the core. They have 12-13 proprietary solutions currently, with plans to add at least five more annually, and have completed over 200 projects.

C2C Advanced Systems operates in the defence sector, which is projected to see significant growth, with India's defence spending around $75-80 billion and exports expected to reach $6 billion by 2030. The company emphasizes 'non-kinetic warfare' and 'software-driven' future warfare. Their products are designed for 'dual use,' meaning they can be applied in both military and industrial sectors, covering the entire military spectrum and leveraging industrial systems used by the military. This dual-use strategy allows for broader market penetration and recurring revenues.

The company currently holds a signed order book of ₹158.3 crores, comprising ₹7 million USD from an international industrial security component and ₹100 crores from the domestic defence sector. The pipeline for proposals and bids is substantial, totaling ₹1,144 crores, with potential for large defence projects up to ₹2,700 crores. Management anticipates a conversion rate of approximately 30% for these proposals. A successful Proof of Concept (POC) for a border post project, involving 1500-2000 installations at ₹6 crores each, indicates a potential market worth thousands of crores.

Receivables increased significantly from ₹100 crores in March to ₹166 crores in September, a 66% rise. This was primarily attributed to long payment cycles in India and tariff issues affecting a Malaysian contract, where a 50% tariff imposed by America delayed payment. Management expects to realize ₹42 crores from this contract by December and another ₹30 crores by March. For FY26, the company targets receivables to be in the range of ₹150-160 crores, corresponding to approximately 270 days. Despite being debt-free, the company is considering short-term debt as a primary option to fund large upcoming projects.

While the company has achieved success internationally, with operations in Malaysia, Indonesia, and ongoing work in the Philippines and Middle East, penetrating the domestic market remains a focus. Management notes that their size previously limited domestic penetration, but they are now receiving more orders and inquiries from DRDO and the Navy, including a recent ₹15 crore domestic order. The company aims for 75% of its FY26 revenues to come from defence, including IP and dual-use applications. They are also working with a Canadian company, whose product is used by NATO countries, enhancing their international presence and 'make-in-India' confidence.

C2C Advanced Systems emphasizes its strong leadership team, including former Indian Navy and NTRO specialists, contributing to its deep domain expertise. The company's headcount is currently around 250, projected to reach 350 by year-end. A key area of focus is cybersecurity, led by Colonel Harkamal Sidhu from the National Security Agency of India. The company's approach to cybersecurity is architectural, aiming to build solutions that are inherently secure against hacking, rather than just focusing on offensive measures. They also act as an outsourced CISO for clients, addressing the lack of comprehensive cybersecurity solutions in India.