🧠 1. At a Glance
Centum Electronics is an ESDM (Electronics System Design & Manufacturing) firm making critical subsystems for ISRO, DRDO, defense, aerospace, and industrial clients. Revenue’s grown ~14% in 3 years, but PAT has nosedived to -₹2 Cr in FY25. Despite all this, the stock trades at 8.4x book value, thanks to DRDO orders, QIP hype, and its “desi defence” narrative.
🎬 2. Introduction with Hook
Centum is that friend who has great potential on paper — “Works with ISRO”, “Trusted by DRDO”, “Designs critical defense subsystems” — but IRL, he’s broke, erratic, and just got bailed out by institutions (via a QIP). FY25 finally turned profitable in Q4, but overall? Red ink.
So the big question: is this a satellite stock or a crash-landing waiting to happen?
🏭 3. WTF Do They Even Do? (Business Model)
Centum operates in two key verticals:
- 🎯 Design + Engineering Services (ER&D): Hardware + embedded software for aerospace, defense, and space tech
- ⚙️ Manufacturing Systems & Subsystems: From missile electronics to satellite payloads to railway communication
Clients: ISRO, DRDO, European space agencies, medical & transport firms.
They also own a French subsidiary (Centum T&S) which bleeds cash faster than HAL builds aircraft.
📈 4. Financials Overview – Profit, Margins, ROE, Growth
| Metric | FY21 | FY22 | FY23 | FY24 | FY25 |
|---|---|---|---|---|---|
| Revenue (₹ Cr) | 817 | 780 | 923 | 1,091 | 1,155 |
| PAT (₹ Cr) | 12 | -53 | 7 | -3 | -2 |
| OPM % | 11% | 9% | 8% | 8% | 8% |
| ROCE | 8% | 6% | 8% | 10% | 12% |
| ROE | 13% | -23% | 7.6% | -1.8% | -3.9% |
📉 Despite 41% growth in topline over 4 years, profits have zig-zagged like a testing drone.
💸 5. Valuation – Is It Cheap, Meh, or Crack?
| Metric | Value |
|---|---|
| CMP | ₹2,326 |
| Book Value | ₹276 |
| P/B | 8.44x |
| P/E | N/A (Loss-making) |
🧠 FV Range (assuming it hits ₹40 EPS in FY26 and trades at 25–35x if profitable):
👉 FV Range = ₹1,000–₹1,400
(Current CMP = 60–130% premium to optimism 😅)
Clearly pricing in future defense order pipeline, not past balance sheet.
🍲 6. What’s Cooking – News, Triggers, Drama
🔥 HOT:
- DRDO Orders: ₹187 Cr (Mar 2024), ₹110 Cr (Aug 2024) for EW & payloads
- FY25 Q4 profit: ₹22 Cr — finally some black ink!
- QIP raised in FY25 to fund expansion
🧯 NOT:
- FY25 full year still in net loss (-₹2 Cr)
- French subsidiary burns cash like Parisian croissants
- Promoters diluted stake from 58.7% to 51.5% 😐
🏦 7. Balance Sheet – How Much Debt, How Many Dreams?
| Metric | FY25 |
|---|---|
| Equity | ₹15 Cr |
| Reserves | ₹391 Cr |
| Debt | ₹187 Cr |
| Total Liabilities | ₹1,239 Cr |
| Net Block + CWIP | ₹233 Cr |
| Cash Flow from Ops | -₹29 Cr |
Not debt-heavy, but capital inefficiency is the villain. CWIP and asset base not translating into PAT.
💰 8. Cash Flow – Sab Number Game Hai
| Year | CFO (₹ Cr) | CFI | CFF | Net Cash |
|---|---|---|---|---|
| FY23 | ₹71 Cr | -₹10 Cr | -₹88 Cr | -₹27 Cr |
| FY24 | ₹214 Cr | -₹44 Cr | -₹145 Cr | ₹25 Cr |
| FY25 | -₹29 Cr | -₹59 Cr | ₹107 Cr | ₹19 Cr |
🧯 FY25 CFO turned negative. Financing kept them afloat — QIP was the lifeline.
📊 9. Ratios – Sexy or Stressy?
| Ratio | FY25 |
|---|---|
| ROCE | 12.2% ✅ (Q4 bump) |
| ROE | -3.91% ❌ |
| OPM | 8% |
| Debtor Days | 97 |
| Inventory Days | 213 ❌ |
| CCC | 175 days = Long wait for cash |
Not terrible, but not hero-grade either. More HAL trainee than BrahMos-tier.
💸 10. P&L Breakdown – Show Me the Money
| Metric | FY25 |
|---|---|
| Revenue | ₹1,155 Cr |
| EBITDA | ₹97 Cr |
| PAT | -₹2 Cr |
| EPS | -₹1.31 |
| Dividend | ₹6/share (because why not 🤷) |
💡 They paid dividend despite losses — maybe to flex for QIP investors?
🤼 11. Peer Comparison – Who Else Is in the Game?
| Company | Sales (₹ Cr) | PAT (₹ Cr) | ROE | P/E |
|---|---|---|---|---|
| Kaynes Tech | 2,721 | ₹293 | 11.0% | 137x |
| Syrma SGS | 3,787 | ₹171 | 10.2% | 63.8x |
| Centum | 1,155 | -₹2 | -3.9% | N/A |
🧪 Verdict: Smallest in revenue, weakest in margin, negative in profit — yet valued on hope.
🧾 12. Misc – Promoters, Shareholding, Other Gyaan
| Group | Mar 2025 |
|---|---|
| Promoter | 51.52% ⬇️ |
| FII | 0.81% |
| DII | 15.36% ✅ growing |
| Public | 32.31% |
| Shareholders | ~18,150 |
📌 DII support (15.3%) gives some hope. But promoter dilution? 👀
🧑⚖️ 13. EduInvesting Verdict™
Centum is the classic “Bharat Electronics Jr.” pitch, but FY25 proves it’s still stuck between defense contracts and defense excuses.
- DRDO orders, Q4 profits, and ER&D potential = ✅
- Negative PAT, erratic margins, low ROE = ❌
- Valuation? High orbit for low fuel.
📦 FV Range: ₹1,000–₹1,400 (based on possible FY26 profit)
🎯 CMP = ₹2,326 = fully priced for ‘Make in India’ moon landing
Time will tell if this circuit completes or shorts out.
✍️ Written by Prashant | 📅 9 July 2025
Tags: Centum Electronics, DRDO Orders, ESDM, Defense Manufacturing, ISRO Suppliers, QIP Stocks, Smallcap Defense Stocks, EduInvesting
