Centum Electronics Ltd Q1 FY27 Earnings Call Summary

Event Participants

Executives

3 Jazer Haveliwala, Nikhil Mallavarapu, Sundararajan Parthasarathy

Analysts

8 Aloksha, Darshan Gala, Deeya Jain, Harish Subramanian, Karan Sanwal, Preet Gopani, Sai Vijay, Vineet Khatri

Financials & KPIs

Geographic & Segment Commentary

Build-to-Specification (BTS): Revenue was muted in Q1 due to project execution schedules, but the order book grew ~40% YoY with strong underlying demand. Management expects continued strong order intake through the year across space, radar, electronic warfare, and air navigation programs. Strong full-year revenue growth is expected despite quarterly lumpiness inherent in contract phasing.

Electronic Manufacturing Services (EMS): Revenue grew 20% YoY with order book expanding 23% YoY. Semiconductor equipment customer ramp-up is progressing well and in line with expectations, with management indicating visibility to surpass current expectations over the next 1-2 years. NPI process initiated for electrification and grid automation products, expected to contribute meaningfully over the next two years.

Exports vs Domestic: Export composition expected to remain in the 50-55% range or slightly higher, driven by EMS growth. No major change expected in the mix.

Company-Specific & Strategic Commentary

Overseas Restructuring Completion: Successfully completed exit from overseas subsidiaries with French Court approving transfer of Centum TNS Group SA operations to MBDA and SII. Entities deconsolidated effective June 4, 2026, with no expected liabilities. One-time deconsolidation gain of ₹94 crores recognized.

Semiconductor Equipment Growth: Revenue from this segment was practically zero in FY25, exceeded ₹100 crores in FY26, and is expected to reach ₹25-30 million (₹210-250 crores) in the coming 1-2 years. Products are in serial production with full qualification complete, providing recurring revenue visibility.

Design-Led Manufacturing (DLM): Integrating engineering services and EMS teams to deliver differentiated design-to-manufacturing solutions. Management optimistic about securing first DLM program wins in coming quarters, which should support improved margin profiles.

Strategic Partner Award: Received Strategic Partner Award from a leading global industrial and energy conglomerate, endorsing engineering capabilities and execution track record. Supports localization and supply chain diversification strategy.

Guidance & Outlook

Risks & Constraints

Q&A Highlights

BTS Revenue Acceleration

• Question: Given the higher project life cycle of over 2.5 years and order book almost doubled since FY24, can we expect accelerated revenue recognition for BTS? (Sai Vijay)
• Answer: Yes, expected healthy growth in BTS revenue driven by increased order book. Quarterly variations exist due to lumpy contract nature, but strong growth expected on a full-year basis. (Nikhil Mallavarapu)
• Advances of ~₹210 crores, with two-thirds from BTS segment. (Sundararajan Parthasarathy)

Semiconductor Equipment Business Profile

• Question: Can you provide more details on semiconductor equipment customers and margins? (Pratik Srivastava)
• Answer: Manufacturing box builds and PCBAs for semiconductor manufacturing equipment (photolithography, etching). Has one key global OEM customer, ramped up from zero in FY25 to over ₹100 crores in FY26. Expected to reach ₹25-30 million in 1-2 years. Margins ~10-11% typical for cost-plus EMS model. DLM offerings could bring higher margins as design work is added. (Nikhil Mallavarapu)

Semiconductor Sustainability & Competition

• Question: Will semiconductor execution remain stable with linear or exponential growth? Who are competitors? (Karan Sanwal)
• Answer: Products are in serial production with full qualification completed - highly recurring business with long product life cycles. Expect steep growth over next 1-2 years before stabilizing. Main competition is in Southeast Asia (Malaysia); no direct India competitors for this EMS business. IP belongs to customer, preventing sales to competitors, though preliminary discussions with other customers are underway for India sourcing. (Nikhil Mallavarapu)

Space & SBS Program Progress

• Question: What are the opportunities from ISRO and the space-based surveillance (SBS) program? (Aloksha)
• Answer: In space business for ~25 years, moving up value chain from components to complete payloads. SBS program is progressing well with good orders already booked and strong order intake expected this year. Also executing electronic warfare-based payload programs closely aligned with SBS, with expected repeat requirements. (Nikhil Mallavarapu)

Revenue Mix & Growth Sustainability

• Question: Will revenue mix sustain a move beyond 70:30 in favor of BTS? Will FY27 growth maintain 25%+? (Harish Subramanian)
• Answer: Both businesses seeing strong growth; BTS may contribute slightly more over 1-2 years but not drastically different from current split. Confident of reaching 25% revenue growth for the year based on order book and project execution. (Nikhil Mallavarapu, Sundararajan Parthasarathy)

FY27/FY28 Explicit Guidance

• Question: Can you provide guidance for FY27 and FY28 revenue and margins, and export/domestic split? (Deeya Jain)
• Answer: Maintain ~25% revenue growth for both years. EBITDA margin targeting 13%+ moving from 12.5% last year. Export composition to remain 50-55% or slightly higher. Too early to comment on next year margins pending order profile. (Sundararajan Parthasarathy)

Major Program Updates (Virupaksha, UHM, GRSE)

• Question: What is the current status of BTS initiatives - Virupaksha, helicopter platform AESA Radar (UHM), and GRSE electronic subsystems? (Vineet Khatri)
• Answer: UHM - completed first phase of critical design reviews, first prototypes expected to be demonstrated next year, awaiting HAL serial production quantities. Virupaksha - in product design phase, development orders expected to complete in Q4 or Q1. GRSE/Takan - technology partnership with localization design engineering work progressing well, first deliveries expected early next year with further orders anticipated in 1-2 quarters. Direct engagements with armed forces progressing through RFI responses. (Nikhil Mallavarapu)

Global BTS Export Opportunity

• Question: Can you elaborate on the global customer opportunity in BTS mentioned at AGM? Will margins be higher than domestic BTS? (Preet Gopani)
• Answer: Specific opportunity in electronic warfare for export customer - early stage with various discussions underway. Export BTS has advantage of not being tender/L1-based, allowing relationship-based pricing. Target ~20%+ margin profile. System-level export opportunities from developed products (like UHM) could command even higher margins once development completes. (Nikhil Mallavarapu)

Competitive Positioning

• Question: How does Centum compare with competitors like Astra and Data Patterns? (Ashit Koti)
• Answer: Two businesses with different competitors. In space, Centum is ahead in capability and history. In radar and EW, competitors may have longer presence but Centum is on par in capability. EMS has unique differentiators in manufacturing requirements and supply chain complexity. Not competing in high-volume consumer electronics. UHM program had 10+ bidders, only 3 shortlisted including Centum - evidence of capability recognition. (Nikhil Mallavarapu)

Capex Plans & New Facility

• Question: What is the status of the KIADB Aerospace facility and capex plans? (Aloksha)
• Answer: Design stage complete, construction starting soon. Land belongs to group company so no investment from Centum Electronics this year. Capex flow could start end of next fiscal for factory build-out, MEP/HVAC, clean rooms, plant machinery. High-level estimate ₹50-70 crores. (Sundararajan Parthasarathy)

Key Takeaway

Centum Electronics delivered steady Q1 FY27 standalone revenue of ₹205 crores (+11% YoY) with consolidated PAT of ₹106 crores including a ₹94 crore one-time gain from the deconsolidation of overseas subsidiaries, marking the successful completion of its restructuring and exit from French operations. The standalone order book reached ₹1,800 crores (+31% YoY) with Q1 order inflow of ₹360 crores (+70% YoY), driven by 150% BTS order inflow growth. Management reiterated ~25% revenue growth guidance for FY27 and FY28 with EBITDA margins improving to 13%+, supported by BTS execution acceleration and semiconductor equipment ramp-up (from zero in FY25 to ₹100+ crores in FY26, targeting ₹25-30 million in 1-2 years). Strategic focus remains on DLM integration, electrification/grid automation NPI programs, and export BTS opportunities in electronic warfare. Key watch points include quarterly BTS revenue lumpiness, concentration on the semiconductor OEM customer, and execution of development programs (UHM, Virupaksha) where first prototype demonstrations are expected next year.