Centum Electron

Centum Electronics delivered a robust Q4 FY25, with consolidated revenues from operations growing by 24% year-on-year and 31% sequentially to ₹369 crores. This strong performance led to a significant increase in consolidated EBITDA, which grew by 132% year-on-year and 115% quarter-on-quarter to ₹42 crores, achieving an EBITDA margin of 11.31%. For the full year FY25, consolidated revenue grew by 6% year-on-year to ₹1,155 crores, or 13% on a gross basis after adjusting for certain net-accounted contracts worth approximately ₹82 crores. Consolidated EBITDA for FY25 stood at ₹97 crores, an increase of 12.6%, with an EBITDA margin of 8.37%, though the company reported a net loss of ₹2 crores for the year.

The company's total order book position as of March 31, 2025, reached ₹1,736 crores. The standalone order book significantly increased to ₹1,330 crores from ₹1,118 crores in the previous financial year, primarily driven by strong order inflows in the Build-To-Specification (BTS) segment for defense and space customers. Standalone revenue for FY25 grew by 18.5% year-on-year to ₹750 crores, with a healthy EBITDA of ₹102 crores (30% YoY growth) and an EBITDA margin of 13.6%. Standalone net profit for the period was ₹53 crores, representing a 46% year-on-year growth.

The standalone order book is split between BTS at ₹664 crores and EMS at ₹665 crores. Management indicated that BTS typically yields an EBITDA margin of around 20% and a gross margin of approximately 50%, while EMS operates at an EBITDA margin of 10-12% with material costs around 75%. The company aims to grow its BTS revenue from the current ₹175 crores to ₹400-600 crores in the next 3-4 years. New customer additions in semiconductor equipment and biometric solutions are expected to drive EMS growth, alongside increased volumes from existing aerospace and defense clients.

A significant portion of the consolidated net loss of ₹2 crores for FY25 was attributed to the Canadian subsidiary, which recorded a loss of EUR 2.8 million in FY25, contributing to a total loss of approximately EUR 5.3 million over the past two years. This subsidiary, focused on passenger information systems for rail, is facing challenges due to insufficient revenues to cover manpower costs. Management is actively exploring strategic options to address and plug these losses, targeting completion by September or sooner. The French engineering services business is also undergoing cost optimization measures and shifting its focus towards defense and aerospace customers to improve utilization and profitability.

Centum Electronics projects a consolidated revenue growth of 25-28% for FY26, with a blended standalone growth rate in the same range. The company is confident in achieving a consolidated EBITDA margin of 10% for FY26, contingent on resolving the Canadian subsidiary's issues. Over the next two years, the goal is to further improve the consolidated EBITDA margin to 11-12%. Management also targets an 18-20% CAGR for consolidated revenue over the next three years, supported by a healthy order bidding pipeline of approximately ₹2,000 crores for the next 3-4 years in the build-to-spec defense and aerospace business.

Centum is strategically engaged across various high-growth sectors. In defense and space, these applications account for 40-50% of the BTS order book, with involvement in satellite payloads, electronic intelligence, radar systems (VL-SRSAM), missile programs, and tank electronics. Beyond defense, the company is exploring opportunities in semiconductor equipment, industrial applications (renewables, grid automation, electrification), biometrics, and the automotive EV segment. To support this growth, a CAPEX of approximately ₹40 crores is planned for FY26, primarily for standalone operations to augment capabilities and capacities in both BTS and EMS segments.

The contribution from India to Centum's overall revenue currently stands at approximately 29%. Management anticipates a gradual increase in this proportion, potentially reaching 35% in the next three years, driven by the 'Make in India' initiative and growing domestic demand in defense and space. The company emphasizes talent management, employee retention, and attrition monitoring, particularly investing in management, indirect middle management, and engineers for new product qualifications to support future growth and productivity.