Detailed Narrative
Strong Standalone Performance Drives Growth
Centum Electronics reported robust standalone results for Q2 H1 FY26. Standalone revenue from operations grew 18% YoY to INR 206 crores in Q2 and 24% YoY to INR 391 crores in H1. EBITDA for Q2 increased 36% YoY to INR 25 crores, with margins expanding by 154 basis points to 11.97%. Standalone PAT saw a significant 97% YoY increase to INR 13 crores in Q2 and 182% YoY to INR 29 crores in H1, primarily driven by strong execution in the Build-to-Spec business for domestic defence and space customers.
International Operations Face Headwinds and Strategic Review
Despite strong standalone performance, consolidated results were impacted by losses from international operations. Consolidated EBITDA declined 12% YoY to INR 18 crores in Q2, with margins falling by 165 basis points to 6.16%. The company acknowledged weak macroeconomic conditions and intense competition in the ER&D market in France. Management is actively pursuing the divestment of its Canada operations, expecting a clear decision within the next one to two months, and evaluating the long-term strategic direction of its European business by the end of Q4 FY26 to mitigate future losses.
Robust Order Book and H2 FY26 Outlook
Centum maintains a healthy order book and pipeline, expecting strong order execution in H2 FY26. The domestic Build-to-Spec order book stands at INR 665-670 crores, with a target of over INR 2,000 crores in order booking over the next three years. The EMS business also shows strong momentum, with an order book of INR 763 crores at the end of Q2. Management is targeting 30% standalone revenue growth for the full FY26 and expects standalone EBITDA margins to be in the range of 13% to 15%.
Key Strategic Partnerships and Space Opportunities
The company strengthened strategic partnerships, signing MoUs with GRSE for navigation systems for the Indian Navy and with BEL for indigenous defence electronics. It also delivered nearly 400 critical modules for ISRO's CMS-3 GSAT-7R program. Management highlighted a significant opportunity in space-based surveillance with an addressable market of close to INR 1,000 crores and a potential INR 500-600 crore opportunity over five years from the GRSE partnership for naval systems.
Balance Sheet and Liquidity Management
As of September 30, 2025, borrowings stood at INR 108 crores, a 12% increase net of discounted letters of credit. The company maintained healthy cash balances of INR 136 crores, including INR 76 crores from QIP proceeds. Management also reduced subsidiary borrowings by INR 13 crores through waivers and cancellations, and restructured some loans to improve liquidity and operational efficiency, supporting anticipated higher revenues in the second half.