This Defence Stock, engaged in Build-to-Specification (BTS) and Electronics Manufacturing Services (EMS), serving defence, aerospace, space, semiconductors, healthcare, automotive, transportation, industrial and energy sectors, is in focus after ICICI Direct gave a Buy target of Rs. 5,900, which has an upside potential of 22.12 percent.
With a market capitalization of Rs. 7,137.36 crore, the shares of Centum Electronics Limited were currently trading at Rs. 4,834.95 per equity share, rising nearly 0.08 percent from its previous day’s close price of Rs. 4,831.30 per equity share.
What is the News?
ICICI Direct, a prominent brokerage firm, has recommended a “Buy” call on Centum Electronics Limited with a target price of Rs. 5,900 per share, indicating an upside potential of 22.12 percent from its previous day’s closing price of Rs. 4,831.30 per share.
Rationale for Buy Rating on Centum Electronics
Strong Defence & Aerospace Franchise
Centum has built decades-long relationships with DRDO, ISRO and major defence PSUs, supplying mission-critical products for programmes such as Mangalyaan, Gaganyaan and Chandrayaan-3. Its strong credentials, regulated end-markets and high single-source product share create significant entry barriers and provide long-term customer stickiness.
Robust Order Book Visibility
The standalone order book of Centum was estimated at approximately Rs. 1,800 crore in Q1FY27 with a YoY growth of 32 percent. Of note is the fact that the BTS order book rose by 42 percent YoY to an estimated Rs. 925 crore.
Structural Sector Tailwinds
Centum stands to gain greatly from the initiatives of the government towards the indigenization of defence production and the ‘Make in India’ program. The company has interests in sectors like aerospace & defence, transportation, automobile, healthcare, industrials and energy, thus providing the company with numerous opportunities for growth.
Semiconductor Opportunity Scaling Rapidly
The semiconductors equipment segment at Centum has shown considerable growth, with revenues increasing from almost negligible levels in FY25 to more than Rs. 100 crores in FY26. The management sees this as another growth path scaling up to Rs. 250 crores in just two years from now.
Margin Expansion Potential
The current revenue structure for Centum is mainly composed of EMS services that generate relatively low margins, while higher-margin BTS contributes approximately 28 percent to its revenue. With BTS contribution expected to increase to 33 percent and improved capacity utilization, operating leverage can facilitate significant growth in EBITDA margins.
Improved Profitability & Long-Term Outlook
The exit of Centum from its loss-making subsidiaries in Europe is likely to be an important catalyst for its financial performance. Given that management is expected to concentrate on its core operations, with 25-30 percent revenue growth per annum and 13-15 percent EBITDA margin, there is a possibility that the business mix will improve.
Business Highlights:
Centum Electronics Limited operates across two key business segments such as Build-to-Specification (BTS) and Electronics Manufacturing Services (EMS). The company has a substantial 350,000 sq. ft. manufacturing footprint, supported by strong technological capabilities with 17 patents granted and over 125 publications.
The exports make up 54 percent of the total income, stressing on the wide range of customers it has from all around the world. The company has a diverse supplier base of more than 600 suppliers in the world, which enables it to have a strong manufacturing infrastructure.
Segment Revenue Breakup:
The revenue generation of Centum Electronics is well diversified geographically, with India accounting for 46 percent of standalone revenue, followed by North America & Rest of World at 31 percent and Europe & UK at 23 percent.
In terms of the revenue contribution from the various industry verticals, Centum enjoys the highest revenue from Defense, Space & Aerospace, which contributes 45 percent of its total revenue. This clearly demonstrates Centum’s high involvement in the strategic industries. The Semiconductor industry contributes 17 percent, while the healthcare vertical contributes 14 percent.
Order Book Details:
Centum Electronics Limited’s standalone order book has grown consistently from Rs. 948 crore in FY23 to Rs. 1,797.2 crore in Q1FY27, implying an approximately 20 percent CAGR over the period. The strong growth reflects increasing demand across its key business segments and provides healthy medium-term revenue visibility. The order book stood at Rs. 1,797 crore in Q1FY27, comprising Rs. 925.4 crore from BTS and Rs. 871.8 crore from EMS.
The BTS order book has expanded significantly from Rs. 376.5 crore in FY23 to Rs. 925 crore in Q1FY27, indicating increasing traction in higher-value, customised solutions. BTS orders typically have an execution cycle of 2–2.5 years, supporting longer-term visibility, while EMS orders are largely customer-forecast driven and execute within 6–9 months, providing near-term revenue opportunities.
The company’s order book is more India-focused, with 54 percent of orders from India, while Europe & UK account for 33 percent and North America & RoW contribute 13 percent, indicating strong domestic demand and a healthy international presence.
Company Overview:
Centum Electronics Limited is an Indian electronics solutions company engaged in Build-to-Specification (BTS) and Electronics Manufacturing Services (EMS) businesses. The company serves critical industries including defence, aerospace, space, semiconductors, transportation, automotive, healthcare, industrials, and energy. Centum provides complex electronic systems, assemblies and customised solutions to domestic and global customers.
Recent Quarter Results:
Looking at the company’s financial highlights, Centum Electronics Limited’s revenue has increased from Rs. 179 crore in Q1 FY26 to Rs. 204 crore in Q1 FY27, which has grown by 13.97 percent. The net profit has also grown by 2,020 percent from Rs. 5 crore in Q1 FY26 to Rs. 106 crore in Q1 FY27.
Centum Electronics Limited’s revenue has grown at a CAGR of 3 percent over the last five years. In terms of return ratios, the company’s ROCE and ROE stand at 25.5 percent and -12.5 percent, respectively. Centum Electronics Limited has an earnings per share (EPS) of Rs. 33.4, and its debt-to-equity ratio is 0.36x.