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Hidden Gem : Centum Electronics – Deep capabilities, Strong growth runway (Target Price 5900)

ICICIdirect Research 25 Sep 2026 DISCLAIMER

Centum Electronics (Centum) is a premier electronics system design and manufacturing (ESDM) company focused on high-reliability, mission-critical electronics across defence, aerospace, space, semiconductor equipment and industrials. With over three decades of experience, Centum has built strong relationships with strategic customers such as ISRO, DRDO and large defence PSUs, with ~50% of FY26 revenue coming from Aerospace, Defence & Space.
The company operates across highly critical and regulated sectors, creating significant entry barriers through qualification requirements, reliability and customer relationships. Around 70% of its products are single-sourced, while ~30% of revenue comes from customers with relationships of over 20 years. Centum has also established a presence in the semiconductor equipment segment, which has scaled rapidly from negligible revenue in FY25 to ₹100+ crore in FY26.
Centum currently operates through two business models – 1) EMS (Electronics Manufacturing Services/Build-to-Print), contributing ~72% of FY26 revenue, and 2) BTS (Build-to-Specification), contributing ~28%. While EMS remains the larger revenue contributor, the mix is gradually shifting towards BTS, with BTS accounting for ~52% of the Q1FY27 order book and growing ~40% YoY versus ~23% YoY growth in EMS order book. Going ahead, we expect BTS contribution to increase to ~33% by FY28E, improving the overall quality of revenue.
The shift towards BTS also provides a significant margin expansion opportunity, as BTS carries benchmark EBITDA margins of 20%+ compared with ~9–11% for EMS. Alongside the improving business mix, Centum is currently operating at only ~50–60% utilisation, providing scope for operating leverage as revenues scale. We expect EBITDA margins to improve from 12.4% in FY26 to ~14.2% by FY28E, supported by higher BTS contribution and better capacity utilisation.
Apart from the existing order book, Centum is working on several high-value developmental programmes across defence, aerospace and space, including AESA radar, TACAN and space-based programmes. Successful commercialisation of these programmes could provide an additional growth runway beyond FY28, while its semiconductor equipment business is also expected to scale further.
Overall, we expect revenue/PAT to grow at ~26%/~33% CAGR over FY26–28E, supported by a strong ~₹1,800 crore order book, increasing BTS contribution and margin expansion. We have a BUY rating on Centum with a target price of ₹5,900, valuing the company at 65x FY28E EPS.

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