Centum Electronics has officially announced a strategic teaming agreement with Indra Air Traffic Inc. to jointly develop and manufacture advanced air navigation systems for the Indian naval forces. The company disclosed this development through a regulatory filing under Regulation 30 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Strategic Partnership Framework

The collaboration between Centum Electronics and Indra Air Traffic Inc. focuses on manufacturing state-of-the-art air navigation systems in India, specifically tailored for the Indian Navy. This partnership combines Centum's strong engineering, R&D, and high-reliability manufacturing capabilities with Indra's global expertise and advanced technology solutions.

Executive Leadership Statements

Nikhil Mallavarapu, Joint Managing Director of Centum Electronics, emphasized the significance of this partnership: "Our partnership with Indra Air Traffic is a testament to Centum's unwavering commitment to innovation and excellence. By joining forces, we are not only advancing India's defence capabilities but also championing the spirit of Aatmanirbhar Bharat. Together, we are shaping a future where India stands at the forefront of technological leadership and operational readiness."

Kenneth Cleveland, Vice President - Sales Marketing of Indra, stated: "I am pleased to announce the signing of the Teaming Agreement with our esteemed partner Centum for the joint development of the Advanced Air navigation system. This partnership represents a significant step towards strengthening indigenous capabilities and advancing our contribution to Aatmanirbhar Bharat."

Aatmanirbhar Bharat Initiative Alignment

This strategic alliance directly supports the Government of India's Aatmanirbhar Bharat initiative by promoting indigenous development of critical defence technologies. The partnership aims to reduce dependence on foreign suppliers for sophisticated naval navigation systems while building domestic capabilities in this crucial sector. The collaboration is expected to strengthen operational readiness and provide mission-critical, cutting-edge systems to India's armed forces.

Technology and Manufacturing Excellence

The partnership will leverage Centum's established reputation for reliability, innovation, and high-technology engineering excellence in serving mission-critical domains. Combined with Indra Air Traffic's position as a global leader in defence, air traffic, and space technologies, the alliance sets a new benchmark for indigenous manufacturing and operational superiority in India's defence sector.

Centum Electronics has reported a robust 18% year-over-year standalone revenue growth to INR 206.00 crores in the second quarter, driven by strong execution in its Build-to-Spec (BTS) business for domestic defence and space customers. The company's EBITDA margins expanded to 11.97%, reflecting operational efficiency and an improved revenue mix.

Financial Highlights

• Standalone revenue grew 18% YoY to INR 206.00 crores in Q2
• EBITDA margins expanded by 154 basis points to 11.97%
• Standalone PAT increased by 97% YoY to INR 13.00 crores
• H1 standalone revenue up 24% YoY to INR 391.00 crores

Business Performance

The company's growth was primarily driven by its domestic operations, particularly in the Build-to-Spec and Electronic Manufacturing Services (EMS) segments. Centum Electronics is targeting a 30% growth for the full financial year on a standalone basis, with expectations of accelerated revenues in the second half.

Order Book and Future Outlook

Centum Electronics reported a healthy order book, with the domestic Build-to-Spec business standing at approximately INR 650.00 crores and the EMS business at INR 763.00 crores as of Q2. The company is eyeing significant opportunities in the space and defence sectors, including:

• A potential INR 1,000.00 crore opportunity in space-based surveillance programs over the next few years
• Advanced stage of design finalization for electronic warfare-based payloads
• Prospects for additional satellite constellation orders, following a previous INR 300.00 crore order

Strategic Partnerships and Recognitions

The company has strengthened its position through strategic partnerships and recognitions:

• Signed MoUs with Garden Reach Shipbuilders and Engineers (GRSE) for collaboration on navigation systems for the Indian Navy
• Partnered with Bharat Electronics Limited (BEL) to advance indigenous defence electronics
• Delivered nearly 400 critical modules for ISRO's recent CMS-3 GSAT-7R program
• Received NABL accreditation for its BTS unit, enhancing credibility in defence contracts
• Recognized by CII as an energy-efficient unit for excellence in energy management

Challenges in International Operations

Despite strong domestic performance, Centum Electronics faced challenges in its international subsidiaries:

• Weak macroeconomic conditions and intense competition in the ER&D market in France affected the European subsidiary
• The company is progressing on the planned divestment of its Canada operations
• Management is evaluating strategic options for the European business to address the impact on consolidated margins

Nikhil Mallavarapu, Joint Managing Director, commented, "We are confident about our growth trajectory in the domestic market. While our international operations face challenges, we are taking decisive actions to address these issues and expect to have clear direction by the end of Q4."

The company remains focused on capitalizing on the growing opportunities in the Indian defence and space sectors, while working to resolve the challenges in its international operations.