Add Centum Electronics Ltd for the Target Rs. 3,300 by Choice Institutional Equities
Key Conference Call Highlights
Strategic Restructuring & Capital Allocation
* The management took decisive steps to close underperforming overseas operations
* Operations in Canada were discontinued in Q4FY26
* The French subsidiary entered a court-supervised legal restructuring process in March 2026 and final bids for the French asset sale are expected shortly
* The divestment process targets conclusion by July 2026
* No financial realisation is expected from the European sale due to significant liabilities
* Management expects no further exceptional losses related to this restructuring
* Capital allocation and management bandwidth will now focus purely on core India ESDM platform
Guidance & Outlook
* The management targets a medium-term standalone revenue CAGR of 25–30%
* EBITDA margin is guided at 13–15% in the near-to-medium term
* FY27E capex is projected at approximately INR 40–45 Cr
Segmental Performance: Build-to-Specification (BTS)
* The BTS segment delivered revenue growth of ~37% YoY in FY26
* This is a structurally higher-margin business, operating at ~20% EBITDA margin
* The standalone order book grew ~23% YoY to close at INR 1,645 Cr
* FY26 order inflows for the BTS segment surpassed INR 400 Cr
* Secured a marquee full-turnkey AESA Radar program from HNAL for the UH-M platform
* Opportunity size for the HNAL radar exceeds INR 570 Cr over its lifecycle. Phase one (development) of the project is valued at INR 66–67 Cr over the next two years
* Won a second Radar System order for Satellite and Space debris tracking, valued at nearly INR 30 Cr for a single system
* Secured a development contract for the Virupaksha radar programme – valued at under INR 10 Cr for two critical, high-value subsystems
Segmental Performance: Electronics Manufacturing Services (EMS)
* The EMS segment achieved revenue growth of ~21% YoY in FY26
* EMS operates on a cost-plus model, yielding typical EBITDA margin of 9–10%
* The management is initiating preliminary discussions with other potential global semiconductor clients
Supply Chain
* Emerging supply chain bottlenecks are negatively impacting PCB lead times
* The management is utilising advance ordering to successfully mitigate these lead time extensions
* The ongoing Middle East conflict caused short-term logistics delays at the end of Q4
* However, no major long-term supply disruption has been observed from the geopolitical conflict
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