Centum Electronics Limited — Q4 FY25 earnings call

Call held 26 May 2025

Management summary

Centum Electronics reported a strong Q4 FY25, driven by its Build-To-Specification (BTS) and EMS businesses, leading to significant year-on-year growth in revenue and EBITDA. Despite a consolidated net loss for the full year FY25, primarily due to subsidiary underperformance, the standalone business showed robust growth and profitability. The company has a healthy order book and outlined clear targets for revenue growth and margin expansion for FY26, alongside strategic measures to address subsidiary challenges.

Highlights

  • Q4 FY25 Consolidated Revenue grew 24% YoY to ₹369 crores.

  • Q4 FY25 Consolidated EBITDA grew 132% YoY to ₹42 crores, with a margin of 11.31%.

  • Full Year FY25 Consolidated Revenue grew 6% YoY to ₹1,155 crores (13% on gross basis).

  • Full Year FY25 Consolidated EBITDA was ₹97 crores, with a margin of 8.37%, resulting in a net loss of ₹2 crores.

  • Standalone Revenue for FY25 grew 18.5% YoY to ₹750 crores, with a net profit of ₹53 crores (46% YoY growth).

  • Total Order Book as of March 31, 2025, stood at ₹1,736 crores, with standalone BTS at ₹664 crores and EMS at ₹665 crores.

  • Working capital increased to 87 days, and ₹110 crores of QIP funds were used for debt reduction.

  • Management targets 25-28% consolidated revenue growth and 10% consolidated EBITDA margin for FY26.

Concerns

  • Canadian Subsidiary Losses

Key financials

3 periods

Headline

  • Total Order Book (Mar 31, 2025)
    ₹1,736 Cr
  • Standalone Order Book (Mar 31, 2025)
    ₹1,330 Cr
  • Consolidated Working Capital Days
    87 days

Q4 FY25

  • Consolidated Revenue
    ₹369 Cr
    YoY +24% QoQ +31%
  • Consolidated EBITDA
    ₹42 Cr
    YoY +132% QoQ +115%
  • Consolidated EBITDA Margin
    11.3%
  • Consolidated Net Profit
    ₹22 Cr

FY25

  • Consolidated Revenue
    ₹1,155 Cr
    YoY +6%
  • Consolidated EBITDA
    ₹97 Cr
    YoY +12.6%
  • Consolidated EBITDA Margin
    8.4%
  • Consolidated Net Loss
    ₹2 Cr
  • Standalone Revenue
    ₹750 Cr
    YoY +18.5%
  • Standalone EBITDA
    ₹102 Cr
    YoY +30%
  • Standalone Net Profit
    ₹53 Cr
    YoY +46%

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.

Segment breakdown

  • Standalone BTS Order Book
    ₹664 Cr Order Book
  • Standalone EMS Order Book
    ₹665 Cr Order Book
  • Subsidiary Revenue (FY25)
    ₹406 Cr Revenue
  • Subsidiary BTS Revenue (FY25)
    ₹187 Cr Revenue
  • Subsidiary Engineering Services Revenue (FY25)
    ₹280 Cr Revenue
  • Canadian Subsidiary Loss (FY25)
    2.8 million eur Loss

Guidance & targets

Revenue

  • Consolidated Revenue Growth Revenue · FY26 · Medium confidence 25-28%
    at a standalone level both the EMS and the BTS part of the business should grow for us at a blended rate of somewhere in the range of about 25% to 28%.

    — Nikhil Mallavarapu, Joint Managing Director

  • Consolidated Revenue Growth CAGR Revenue · next three years · Medium confidence 18-20%
    As we have been maintaining, we are targeting 18% to 20% CAGR for the next three years.

    — K. S. Desikan, Chief Financial Officer

Profitability

  • Consolidated EBITDA Margin Profitability · FY26 · High confidence 10%
    And if you solve the Canadian subsidiary problem say by the September quarter, for the full year do you feel on a consol basis an EBITDA margin of 10% which you were guiding earlier is possible in this year itself? Yes. That should be definitely be possible at the consol level.

    — Nikhil Mallavarapu, Joint Managing Director

  • Consolidated EBITDA Margin Profitability · next two years · High confidence 11-12%

    Previously 10% → 11-12%

    So, say in the next three years, Mr. Desikan just mentioned that next year it's quite likely we be at about 10% consolidated EBITDA. So, say in the next three years, where can this number be? Can it be like 11% to 12%? Yes. Definitely. I think that's our goal, to improve that from 10% to probably around 12% in the next two years.

    — K. S. Desikan, Chief Financial Officer

Order Book

  • Order Bidding Pipeline Order Book · next three to four years · Medium confidence ₹2,000 crores
    The pipeline of orders is healthy, I mentioned this in the past, we are roughly looking at something in the range of about Rs. 2,000 crores of booking in the next three to four years, that's what we are targeting.

    — Nikhil Mallavarapu, Joint Managing Director

Capex

  • CAPEX Capex · FY26 · High confidence ₹40 crores
    We are planning to invest about Rs. 40 crores, that again only in the standalone, essentially to augment the capabilities and increase the capacities, both in the BTS segment as well as the EMS segment.

    — K.S. Desikan, Chief Financial Officer

Geographic Mix

  • India Contribution to Revenue Geographic Mix · next three years · Medium confidence 35%

    From 29% today

    And is it fair to assume that this 29%, given the trend in recent years, can go to as much as 35%, not really 70%, but 35%? Is that a possibility in the next three years? Yes. I mean, certainly, yes.

    — Nikhil Mallavarapu, Joint Managing Director

Subsidiary Performance

  • Canadian Subsidiary Loss Resolution Subsidiary Performance · September 2025 · Medium confidence completed by September or sooner
    So, there will be something that we are doing and we are targeting to have this completed by September or sooner.

    — Nikhil Mallavarapu, Joint Managing Director

Risks & concerns

  • Canadian Subsidiary Losses

    high

    The Canadian subsidiary contributed EUR 2.8 million loss in FY25, significantly impacting consolidated profitability. Management is actively exploring strategic options to stop the bleeding by September 2025.

    Management acknowledged

  • Government Procurement Timelines and Uncertainty

    medium

    The target for booking ₹2,000 crores in orders over the next 3-4 years depends on government procurement processes, which have inherent uncertainties and can impact timelines.

    Management acknowledged

  • Softness in European Automotive and Space Sectors

    medium

    The French engineering services business experienced revenue decline and margin degradation due to slowdowns in the automotive and space sectors in Europe, leading to customer layoffs and reduced demand.

    Management acknowledged

  • Execution and New Product Qualification Pace

    medium

    While demand is visible, meeting revenue targets for FY26 relies heavily on the aggressive qualification of new products and efficient delivery, which management is closely monitoring.

    Management acknowledged

Areas of evasion (2)

  • Specific details on defense programs (e.g., RAW agency project, SBS Phase-3 details)
  • Updates on emergency procurement timelines

Q&A highlights

3 direct
Subsidiary Losses and Future Strategy Direct
Big part of the loss is being contributed from the Canadian subsidiary, and we are in various, I would say, in advanced stages of discussions with our customer basically to explain to them that we are not able to sustain taking this type of losses. And so we are exploring a couple of different strategic options that would enable... to be able to plug our losses in a short-term. So, there will be something that we are doing and we are targeting to have this completed by September or sooner.

This question directly addresses the drag on consolidated profitability and management's concrete plans to resolve it, which is crucial for future margin improvement.

Asked by Karan Sanwal

Confidence in FY26 Growth and Margin Targets Direct
I think, as I mentioned, there are two things. One is on the build-to-spec side of the business, with the order intake that we have had, I think the demand side of it is relatively secure. Similarly, on the EMS side of the business as well, we have a clear plan and visibility of which specific products and customers will be driving this growth... So, in summary, we do feel confident that we should be able to grow at a pretty healthy rate in the coming year.

Analysts pressed on the achievability of aggressive growth and margin targets, and management provided a detailed rationale based on demand visibility and execution focus.

Asked by Nirali Gopani

Order Book Execution Timelines and Pipeline Direct
Typically our BTS order book is executable over say somewhere between two to two and a half years in terms of time horizon, whereas the EMS order book is typically less than 12 months, at this stage at least. And on the engineering services side also, it can be even shorter than 10 to 12 months... overall basis something in the range of about 15 months or so, 15 odd months I would say, 15 to 18 months is what you can look at.

Understanding the execution timelines for different segments of the order book provides critical insight into future revenue recognition and operational planning.

Asked by Pranav Shrimal

4 min read 7 chapters

Detailed narrative

Strong Q4 Performance Drives FY25 Consolidated Revenue Growth

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.

Robust Order Book and Standalone Business Strength

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.

Strategic Focus on High-Margin Segments and Future 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.

Addressing Subsidiary Underperformance and Cost Optimization

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.

Confident Outlook for FY26 and Mid-Term Margin Expansion

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.

Diversified Sector Engagement and CAPEX Plans

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.

Increasing Domestic Contribution and Talent Management Focus

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.

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