Synopsis: A defence electronics manufacturer riding India’s indigenisation wave has posted one of the sharpest profit turnarounds in its peer group, with investors now pricing in a hefty premium for that momentum – here’s a closer look at what’s driving the re-rating.
India’s defence and aerospace electronics space has turned into one of the market’s favourite growth themes, powered by Make in India mandates, rising indigenisation targets, and a steady stream of order wins from state-run defence majors. Most stocks in this pocket now trade at rich multiples. One name, however, stands out for combining strong profit momentum with a comparatively modest price tag.
Centum Electronics is an India-based provider of end-to-end electronics system design and manufacturing solutions, with over three decades of experience serving the defence, aerospace, space, and industrial electronics sectors. The company operates through two business segments – Electronics Manufacturing Services and Built-to-Specification – and counts global OEMs among its long-standing customers, with roughly half its revenue coming from overseas markets. With amarket cap of Rs.5,356 Crores, the shares of Centum ElectronicsLtd. closed at Rs.3,622.6 in Tuesday’s trading session.
A Sharp Turn in Profitability
Centum Electronics has delivered a compounded profit growth of 117% over the last three years and 42% over five years, a sharp acceleration from its 10-year compounded profit growth of just 14%. Sales, by contrast, have grown far more slowly – a 3-year CAGR of only 1% and a trailing-twelve-month decline of 18%.
This divergence suggests the profit jump has come largely from margin expansion and operating leverage rather than fresh topline growth, and investors should note that these growth figures appear to reflect adjusted or continuing-operations profit rather than the company’s headline consolidated numbers, which is worth flagging.
It’s also worth noting that on a reported consolidated basis, the company posted a net loss for FY26, largely due to a one-time exceptional charge tied to the exit of its loss-making overseas subsidiaries – a strategic clean-up rather than a core business setback. Strip that out, and the underlying India operations tell a healthier story: consolidated EBITDA margins improved from 8.26% in FY23 to 14.22% in FY26, while standalone revenue grew from Rs 500 crore in FY23 to Rs 973 crore in FY26, a compounded growth rate of roughly 25%.
Valuation Reflects the Turnaround
The stock’s adjusted P/E stands at 99.40x, well above the broader market average, reflecting the premium investors are currently willing to pay for its sharp profit turnaround. Return on capital employed has also improved meaningfully, moving from around 11% in FY23 to over 21% on an adjusted basis in FY26, indicating better capital efficiency alongside the margin gains.
What’s Fuelling the Order Book
The company’s Built-to-Specification defence and space business grew revenue 37% year-on-year in FY26, with its order book up 28%, aided by a marquee AESA radar order worth over Rs 570 crore for a fighter platform and a second complete radar system order for satellite and space-debris tracking. As of March 2026, Centum’s standalone order book stands at Rs.1,644.8 Crores.
Its electronics manufacturing services arm grew 21%, driven by ramp-ups with a global semiconductor equipment customer and new defence export wins. The company also achieved SAMAR Maturity Level 5 certification, opening doors to safety-critical and mission-critical defence tenders that fewer Indian players can access.
Trimming the Fat
Alongside this operational momentum, management has been actively exiting underperforming overseas subsidiaries to sharpen its focus on the core India-based defence, space, and EMS businesses – a move that explains the exceptional charges weighing on reported profit but one that could improve balance sheet quality going forward.
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