Centum Electronics Limited — Q3 FY26 earnings call

Call held 20 Feb 2026

Management summary

Centum Electronics reported strong Q3 FY26 standalone and consolidated growth, driven by robust execution in high-margin Build-to-Spec segments, particularly defense and space. The company made critical strategic decisions to exit loss-making overseas subsidiaries in Canada and restructure French operations, leading to significant one-time exceptional charges. New order wins and a healthy pipeline in defense, space, and EMS segments position the company for continued growth, with a focus on indigenous design and system-level solutions.

Highlights

  • Standalone revenue from operations for Q3 FY26 stood at INR 238 crores, reflecting a strong growth of 27% year-on-year.

  • Standalone EBITDA for Q3 FY26 stood at INR 26 crores, higher by 27% year-on-year.

  • Consolidated revenue from operations for Q3 FY26 stood at INR 331 crores, registering a growth of 21% year-on-year.

  • Declared L1 bidder for the development and production of a complete radar system for a major airborne platform, valued at ~INR 700 crores over 5-6 years.

  • Secured new business awards in the Energy and Industrial segment from a leading global OEM.

  • Completed groundbreaking at KIADB Aerospace Park for a dedicated systems integration facility.

Concerns

  • Discontinued operations in Canada, resulting in a 9M FY26 loss before tax of INR 39 crores.

  • Initiated restructuring actions for French subsidiaries, with no expectation of meaningful realization from divestment.

  • Recognized exceptional items of INR 57 crores (consolidated Q3) and INR 153.8 crores (standalone Q3) primarily due to impairment of goodwill, intangible assets, and investments in overseas subsidiaries.

Key financials

  1. Standalone Revenue ₹238 Cr +27%YoY
  2. Standalone EBITDA ₹26 Cr +27%YoY
  3. Standalone PBT (pre-exceptional) ₹19 Cr +77%YoY
  4. Consolidated Revenue ₹331 Cr +21%YoY
  5. Consolidated EBITDA ₹31 Cr
  6. Consolidated PBT (pre-exceptional, continuing ops) ₹18 Cr +53%YoY

What they filed

Q1 FY27: revenue up 10.8%, net profit down 6.7% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue167 187 274 185 206 +23%238 +27%344 +26%205 +11%
EBITDA20 20 43 26 25 +25%25 +25%45 +5%23 −12%
Net profit10 8 28 15 13 +30%-178 −2325%33 +18%14 −7%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Order book

high confidence

Execution

BTS execution cycle typically 2-2.5 years, EMS <12 months.

Composition

Mix 4 segments
  • Radar System (L1 Bidder) ₹700 Cr 26.9%
  • Air Navigation System (GRSE) ₹500 Cr 19.2%
  • Space-Based Surveillance (SBS) ₹1,000 Cr 38.5%
  • Tank Electronics upgrades/Space-based payloads ₹400 Cr 15.4%

Share of order book by segment, derived from disclosed amounts

Pipeline

L1 awaiting loa

L1 bidder for radar system, orders for SBS program, GRSE air navigation system from other shipbuilders, healthy pipeline for Tank Electronics and Space-based payloads.

Order book has strengthened, providing healthy revenue visibility. Good momentum of order intake expected in Q4.

Source: Prepared remarks

Capital allocation

high confidence
  • Capex Capex disclosed
    • Dedicated facility for systems integration and capability enhancements in critical technology areas at KIADB Aerospace Park in Bengaluru.
    On the capacity expansion front, we also completed the groundbreaking at KIADB Aerospace Park in Bengaluru, where we will be setting up a dedicated facility for systems integration and capability enhancements in critical technology areas.
  • M&A Canadian Subsidiaries Divestment · Closed

    To stop further operational losses.

    Discontinued operations, 9M FY26 loss before tax of INR 39 crores, Q3 FY26 loss before tax of INR 29.8 crores (including one-time impact of INR 24.9 crores).

    we have now discontinued operations in our Canada-based subsidiaries and initiated closure-related actions in accordance with applicable regulations. This effectively stops further operational losses from these entities.
  • M&A French Subsidiaries Divestment · Announced

    Reallocating capital and leadership attention towards core growth segments for stronger long-term returns.

    Expect no meaningful realization from divestment. Full impairment of carrying value of asset taken. Consolidated exceptional items of INR 57 crores (Q3) and INR 55.6 crores (9M) primarily relate to impairment of goodwill and intangible assets.

    Accordingly, the Board has approved initiating actions with respect to our French subsidiaries to assess options, including divestment, sale or transfer of business or judicial reorganization as permitted under the relevant laws.

Guidance & targets

Profitability

  • Standalone EBITDA Margin Profitability · Q4 FY26 · High confidence Maintain or improve
    Typically, Q4 for us is a bigger quarter also. So we will maintain or improve our margins in Q4. And going forward into the next year, again, as we continue to have revenue growth, we will see the operating leverage come in, and we expect a steady improvement of margins also in the coming years.

    — Nikhil Mallavarapu

  • Overall EMS Business EBITDA Margin Profitability · long-term · High confidence 10-11%
    And the EMS business in these type of sectors are typically around the 10%, 11% EBITDA levels.

    — Nikhil Mallavarapu

  • Defense and Aerospace Products EBITDA Margin (Indigenous Designed) Profitability · long-term · Medium confidence 35-40%
    The ability to increase the EBITDA margins to the levels that you just mentioned will come largely if they are indigenous designed products.

    — Nikhil Mallavarapu

Revenue

  • EMS Business (Semiconductor Equipment Customer) Revenue Revenue · FY26 · High confidence $10 million
    We expect, as I mentioned earlier, that on in this financial year, we expect to do at least $10 million of business, if not more, which was practically zero in the past year.

    — Nikhil Mallavarapu

  • EMS Business (Semiconductor Equipment Customer) Annual Run Rate Revenue · in 2 years · High confidence $30 million
    And going forward, we feel we can get to at least a $30 million revenue range per year with this customer in the next 2 to 3 years. So actually, probably even in a 2-year kind of time frame.

    — Nikhil Mallavarapu

Growth

  • Defense and Space Business Growth Growth · coming years · Medium confidence Multifold increase
    I think starting first on the defense side of the business, we have strong objectives of growing this multifold in the coming years.

    — Nikhil Mallavarapu

What to watch in Q4 FY26

Finalization of L1 radar system order

Q4 FY26
Current L1 bidder status
Target Order received

Why it matters

Conversion of this significant L1 bid into a firm order will confirm a major revenue stream and validate Centum's capabilities in complex defense systems.

Further, we were declared L1 bidder for the development and production of a complete radar system... I'm happy to share that we have already received the first order under this program, and we expect more orders in the coming quarters as we build traction.

Risks & concerns

  • Operational losses from overseas subsidiaries

    high

    Discontinued Canada operations to stop further losses; restructuring French operations due to prolonged weak macro environment, subdued demand, and competitive intensity.

    Management acknowledged

  • No meaningful realization from French subsidiary divestment

    medium

    Based on current assessment and external environment, no significant financial upside is expected from the divestment process.

    Management acknowledged

  • Lumpiness of Build-to-Spec (BTS) business

    low

    BTS business is not quarter-on-quarter, with revenues tied to major program deliveries, leading to variability.

    Management acknowledged

Q&A highlights

5 direct
Realization from French subsidiary divestment after full write-off Direct
I think based on our assessment today, we don't expect to realize anything meaningful from this divestment.

Clarifies that despite divestment efforts, no financial upside is expected from the French subsidiary, reinforcing the impact of the write-off.

Asked by Ankit Babel

Timeline for French subsidiary divestment Partial
So I think by next quarter, that is Q4 financial reporting time frame, we expect some more clarity.

Provides a timeline for further updates on the complex restructuring of the French subsidiary, which has significant financial implications.

Asked by Ankit Babel

Value and margin profile of L1 radar system order Direct
The total value of this program is to the tune of about INR700 crores. Over, I would say, 5 to 7 -- 5 to 6 years sort of time horizon... we expect to be at 20% to 25% EBITDA margin.

Quantifies a significant new order win and provides crucial details on its revenue potential and profitability, indicating a high-margin project.

Asked by Balasubramanian

Opportunity size and ramp-up for new semiconductor equipment customer Direct
We expect to do at least $10 million of business, if not more, which was practically zero in the past year. And going forward, we feel we can get to at least a $30 million revenue range per year with this customer in the next 2 to 3 years.

Highlights a new, rapidly growing revenue stream in the EMS segment with clear financial targets, demonstrating successful diversification and execution.

Asked by Soumil Jain

Comparison of EMS vs Defense/Aerospace margins and capital efficiency Direct
while on the EMS side of the business, one of the things that is important to highlight is that while the EBITDA margins are in the range of 10%, 11%, the ROCE for this business can be north of 20%, 25% because capital requirement is much lower as compared to the Defense and Space Products business.

Provides insight into the different business models and capital efficiency of Centum's segments, explaining why lower-margin EMS can still be attractive due to higher ROCE.

Asked by Pranav Bastawala

Impact of PSLV satellite launch failure on Centum's business Direct
It was quite an unfortunate event because we were looking forward to establishing a capability that would have been, again, a first time for India. It was a hyperspectral imaging payload... That being said, to your question, there is expected to be a repeat mission, but we are yet to receive any concrete details regarding that as of now.

Addresses a specific operational setback, acknowledging its impact while maintaining confidence in future opportunities for space-based intelligence.

Asked by Rupesh Tatiya

3 min read 5 chapters

Detailed narrative

Q3 FY26 Performance Highlights and 9M Overview

Centum Electronics reported strong standalone performance for Q3 FY26, with revenue from operations growing 27% YoY to INR 238 crores and EBITDA also up 27% YoY to INR 26 crores. Profit before exceptional items and tax saw a significant 77% YoY increase to INR 19 crores. For the 9-month period, standalone revenue grew 25% YoY to INR 630 crores, with EBITDA up 50% to INR 76 crores, achieving a 12.1% margin. Consolidated performance for Q3 FY26 showed a 21% YoY revenue growth to INR 331 crores and an EBITDA margin of 9.5% (INR 31 crores). The 9-month consolidated revenue reached INR 873 crores, up 15% YoY, with EBITDA at INR 78 crores (8.9% margin).

Overseas Subsidiary Restructuring and Exceptional Items

The company has taken decisive steps to address challenges in its overseas subsidiaries. Operations in Canada have been discontinued, with a 9-month FY26 loss before tax of INR 39 crores and a Q3 FY26 loss of INR 29.8 crores from these discontinued operations. For French subsidiaries, actions for divestment or judicial reorganization have been initiated, with no expectation of meaningful realization. These actions led to significant exceptional items: INR 57 crores consolidated (Q3) and INR 153.8 crores standalone (Q3), primarily for impairment of goodwill, intangible assets, and investments, aiming to reflect a conservative and realistic valuation of overseas exposures.

Defense & Space Segment Growth and New Orders

Centum demonstrated robust execution in its high-margin Build-to-Spec segment, particularly in domestic defense and space programs. A key highlight was being declared L1 bidder for a complete radar system, a program valued at approximately INR 700 crores over 5-6 years, with first production orders expected in Q4. The strategic partnership with GRSE for air navigation systems has already yielded an INR 30 crores order, with a total potential of INR 500 crores over 3-5 years from various shipbuilders. The Space-Based Surveillance program presents an addressable opportunity of INR 1,000 crores, with orders starting to flow in Q4/Q1 next year.

EMS Business Expansion and Semiconductor Mission 2.0

The EMS segment saw strong execution, driven by ramp-up of deliveries to a new semiconductor equipment customer. New orders were secured from this customer, with expected revenues of $10 million in FY26 and an annual run rate of $30 million within two years. The company also secured new business in the Energy and Industrial segment from a global OEM for grid automation and power distribution products. Centum completed groundbreaking at KIADB Aerospace Park for a dedicated facility for systems integration, positioning itself to benefit from the India Semiconductor Mission 2.0 and global semiconductor capex cycle growth.

Strategic Outlook and Margin Profile

Management expressed confidence in achieving multifold growth in the Defense and Space business in the coming years, driven by a strategy to move up the value chain towards integrated systems and platform-level solutions. While the overall EMS business is expected to maintain EBITDA margins of 10-11%, the Defense and Aerospace Products business has the potential for 35-40% EBITDA margins, particularly with indigenous designed products. The company emphasizes its focus on internal R&D capabilities and strategic partnerships with global players to capture opportunities and enhance margins.

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