Centum Electronics Ltd (NSE: CENTUM) Q1 2026 Earnings Call dated Aug. 06, 2025
Corporate Participants:
Unidentified Speaker
Mohit Lohi
Nikhil Mallavarapu
Sundararajan P
Analysts:
Unidentified Participant
Harsh — Analyst
Raman KV — Analyst
Harshil Shethia — Analyst
Vikram Sharma — Analyst
Ankit Gupta — Analyst
Hrushikesh Shah — Analyst
Hrushikesh Shah — Analyst
Ananth Shenoy — Analyst
Raman KV — Analyst
Abhi Mevawala — Analyst
Ajay — Analyst
Pranav — Analyst
Sai Vijay — Analyst
Presentation:
operator
Please wait while you are joined to the conference. The conference is now being recorded. Sam it. Sam it. Ladies and gentlemen, good day and welcome to the Centum Electronics Q1 FY26 earnings conference call hosted by ICICI Securities Private Limited. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touchdown phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Mohit Dhoya. Thank you. And over to you sir.
Mohit Lohi
Yeah, hi. Thanks and good afternoon everyone. Thank you for joining us today. For the quarter one upper 26 call of Centum Electronics Limited. First of all I would like to thank management for providing us the opportunity. To hold the call. From the management side we have Mr. Nikhil, Joint Managing Director, Mr. K.S. ghasikhan, Chief Financial Officer, Mr. Sundarajan Patasarthi, Chief Financial Officer designate. So without further delay I would now hand over the call to management for the opening remarks. Thank you. And over to you sir.
Nikhil Mallavarapu
Thank you Mr. Mohit. And good afternoon everyone. Welcome to our earnings call to discuss the performance of the first quarter of financial year 2026. Let me first mention a special thanks to our host of today’s call at ICICI Securities. I am joined today with our CFO Mr. Desikar and our CFO designate Mr. Sundarajan Pathasati as well. Let me first start by briefing you on the key performance highlights for the quarter on the review after which our CFO dividend Mr. Sundarajan will take you through the financial highlights and for the Q and a. I take the questions along with our CFO Mr.
Vesikant as well. Sorry to interrupt. Mr. Nikhil, can you speak little louder? Sure. In the first quarter under review we delivered a strong performance on both revenue and EBITDA margins. With consolidated revenue from operations growing by 11.4% year on year. This was driven by strong growth at. The standalone level of 35% year on. Year primarily driven by the high margin specification business. With higher deliveries for our domestic defense and space customers they will allow us degrowth in our.
operator
Ladies and gentlemen, the line for the management has got disconnected. Please stay connected. Meanwhile I will connect them back it. The management line is connected.
Nikhil Mallavarapu
Great, thank you so apologies for that. I think we got disconnected. We start again with my comments for the first quarter. During the first quarter under review we delivered a strong performance on both revenue and EBITDA margins. With consolidated revenue from operations growing by 11.4% year on year. This was driven by strong growth at the standalone level of 35% year on year, growth primarily driven by the high margin build to spec business and these deliveries are for our domestic defense and state customers. There was however de growth in our international subsidiary. The demand there is yet to pick up in the ERND business because of delays in customer decisions on new projects due to uncertain macro factors in Europe.
Despite these headwinds, the pipeline of opportunities with key European defense and aerospace customers is improving and we expect a better performance in the second half of this financial year, of course contingent on the conversion of these identified opportunities. In addition, we are making progress on our evaluation of strategic actions to arrest losses and reposition the business, especially with regard to our Canadian subsidiary. On the audible front, our audible position grew to 1769 crores as of 30 June 2025 driven by new EMS customers entering into the serial production phase after successful NPI qualifications. Along with this, we have also received new development orders from DRDO for critical programs like the Viru Paksha Radar which we expect will unlock a significant long term pipeline linked to various airborne platform programs.
Now I would request Mr. Sindharjan to give you more details on the financial performance.
Nikhil Mallavarapu
Thank you Mikhail and a very warm welcome to all of you. Let me brief you on the financial. Highlights for the first quarter of financial year ending 2026. At a standalone level, the revenue from operations was about 180 crores which increased by 35% year on year. The EBITDA for the quarter was around 27 crores which also grew by more than 100% year on year with EBITDA margins reported at 14.92%. The net profit for the quarter was. Around 16.5 crores which surged by more. Than 250% year on year. At a consolidated level, revenue from operations for the quarter was reported as INR 273 crores which grew by 11% year on year. The EBITDA for the quarter was about 23 crores, the growth of 47% year on year and the EBITDA margin reported at 3.38%. The net profit for the quarter was around INR 4.5 crores with PAT margins reported at 1.65%. With that we can open the floor. For Q and A sessions. Thank you so much.
Questions and Answers:
operator
Thank you very much. We will now begin with the question and answer session. Anyone who wishes to ask a question may press Star and one on their touchtone phone. If you wish to remove yourself from the question queue you may press star and two participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Harsh from Pre Petul Capital Advisors. Please go ahead.
Harsh
Hello, Am I audible?
operator
Yes sir. Yes sir.
Harsh
So my first question was on the ERD business, the ER and the revenue or under pressure. So. Can you elaborate on the pathway to recovery for this business and what is the expected timeline for this result? For this recovery and also with Europe actively increasing defense spending, do you see meaningful uptick in this RD opportunity and are we seeing this translate into inquiries or order wind also.
Nikhil Mallavarapu
Great, thank you Harsh for the question. So yes, with regard to the yearly business, we’ve clearly seen demand softness over the past 18 months or so with led effectively by the firstly the automotive sector, partially also on the aerospace sector. But we are seeing an improvement in the pipeline of opportunities driven largely by the defence customers and to a certain extent also with certain aerospace programs. So we expect to, we expect to have some of these pipeline conversions happen over the next few months and with that we are targeting to have an improved performance in the ERA part, at least in the second half of this financial year.
So that’s I would say the overall summary with regard to the Yandy business. Yes, we certainly seeing signs of increased spending in Europe in the form of a better pipeline of opportunities on the defense side. And you know, we hope that this will sustain and convert in the time to call.
Harsh
Right answer. The domestic BTS order book has remained flat. Could you share why is this and are there any expected conversions or current inquiry pipelines and expected conversions in the near term?
Nikhil Mallavarapu
Yes, I mean while the order book has been relatively flat, you must remember that there’s been a significant growth of revenue and deliveries over the last quarter, which is what we just highlighted. So from an order booking standpoint it continues to remain healthy and we continue to see a healthy pipeline of opportunities that we expect to book over the remainder of this year. So the domestic BTS business continues to be a.
Harsh
And so what is the typical execution timeline of the current BTS order book?
Nikhil Mallavarapu
Yeah, typically the BTS orders are in the range of between two to two and a half year execution period.
Harsh
And sir, under development orders which often carry lower or negative margin initially, what is the conversion timeline into production orders like? Are we starting to see some of these translate into higher margin opportunities?
Nikhil Mallavarapu
Yes, certainly, I would say broadly you can categorize the Type of orders we have into two parts. One is large development programs itself which are the kind of things that we do for the state for space programs for example, where these are largely project based project type of business which involves a design phase and delivery of manufacturing phase for things. But these are not huge in numbers because satellites are still relatively small in quantities but high in value. On the other side you have defense programs where there’s several different types of subsystems and all of that where we have a development contract at the beginning or even in presentations we take on the development of products to indigenous imported systems which we felt lasts maybe about 18 months, 18 to 24 months of design and qualification cycle and subsequently we will receive production orders for that over a longer period of time.
So these are the two type of contracts that we typically have. But as I mentioned the design and qualification period itself is somewhere in the range of around 18 months. 18 to 24 months. Sir, on the EMS side.
operator
Mr. Harsh, sorry to interrupt but I request you to rejoin the queue for the follow up question. Thank you. The next question is from the line of Raman KV from Sequent Investments. Please go ahead.
Raman KV
Hello sir, thank you for allowing me to ask you a question and congratulations on good set of numbers. Sir, I just wanted to understand 1. Can you give any update with respect to the Canadian subsidy as in there any deal that has been finalized. Thanks Aman.
Nikhil Mallavarapu
This of course is a key priority as we’ve been mentioning. We’ve made some good progress on that. We believe we should have a decision for this in the coming months and we hope to basically have a decision for that by the end of the current quarter and then you know there will be some time associated short period following that to close and you know basically complete the transaction. So yeah, we’re still working towards that. So.
Raman KV
And can you give a ballpark figure out what will be the cash inflow once you sell off this business?
Nikhil Mallavarapu
Yeah, I’m not able to disclose anything. Of that sort at the moment. And also we should remember this is a loss making business. So expectation of any significant cash in is not correct.
Raman KV
Okay, answer. My second question is with respect to the order book, can you give the order book split?
Nikhil Mallavarapu
I think the earnings presentation that we have highlight. So yeah at a high level we see that about 710 crores is the order book for EMS. 886 crores is BTS and ERD service is 171 crores.
Raman KV
So. And my final question is with respect. To the. The gross margin during this quarter there has been. I mean although the EBITDA margin has increased by 200, almost 200 basis points on year, on year. But the gross margin has declined by 100bps. Is it. Is there any one off or the steady state gross margin? Is the current gross margin? Is the steady state gross margin improved by graph margin?
Nikhil Mallavarapu
But what do you mean by graph margin? Because I’m talking about only.
operator
Can you speak little louder?
Raman KV
Can you hear me?
Nikhil Mallavarapu
Yeah, I can hear you. I’m talking to the management.
Raman KV
So what do you mean by graph? Mark is declining. Can you please explain? Because EBITDA is. We understand. Yeah. So when I’m comparing it on year, on year basis, your gross margin is around 50 to 50 to 51% which is basically exclude margin with respect to the materials consumed. And currently it’s around that 49, 50%.
Nikhil Mallavarapu
Yeah, yeah. I think part of material consumed. We have to be. Just to clarify, there’s a big contribution of the mix of the revenues that plays into this. So fundamentally each of these businesses have different levels of cost margins that we have. The build to spec business, considering the fact that the design is done by us and so on. We have higher level of gross margin in that business compared to the EMS where we are more manufacturing customers design. And if you look finally even at the engineering services part of the business, there it is only people cost because we have no material cost as such in engineering services by itself.
So the level of gross margin will be highly dependent on the mix of these three types of business that we have.
Raman KV
Okay, thank you sir.
operator
Thank you. The next question is from the line of Harshal Setia from Singularity enc. Please go ahead.
Harshil Shethia
Sir. How much loss does the Canadian subsidiary do as of today? As of FY25
Nikhil Mallavarapu
last year, we have lost about 2.4 million euros. And in the two years prior to that also we have been losing about 2 million each year. And that is the reason that we are trying to take that hard decision of stopping the bleeding by one way or another. It’s 600 to 700k. 600. 700K is the EBITDA loss that you’re talking about. It is EBT. EBT level 600,000. Yeah.
Harshil Shethia
Okay. Yes. And sir, how many employees are still left in the Canadian subsidiary? I guess we had already downsized in the last two years.
Nikhil Mallavarapu
Yeah, there are. There are currently around 30 employees that we have there. And this is basically the AL business, right? We are the biggest. They are the largest customer contributing to this business. That’s right.
Harshil Shethia
So when you’re saying you’re trying to reposition this Canadian subsidiary. Are you in so basically negotiating with Al or trying to sell it? Sell the division off?
Nikhil Mallavarapu
We are exploring different options. Our first objective is to stop the law fundamentally. So like I said, at this stage I’m not able to divulge much because we’re under NDA and we need to complete the discussions ongoing. But we are discussing both options to be clear.
Harshil Shethia
And how much does the Canadian subsidiary contribute to revenues in FY25? The current quarter, let me say because it has been coming down and current quarter the subsidiary overall is about 95 crores of which the Canadian entity is.
Nikhil Mallavarapu
About 7 to 8 crores.
Harshil Shethia
And how much would it be last year?
Nikhil Mallavarapu
Some 50, 60 crore or higher than that it would have been about 70 crores. 70, 75 crores.
Harshil Shethia
Okay. And sir, lastly, what is the current bid pipeline in terms of order book as of today? And you know, what is our expectation in terms of order inflow growth for FY26? You’re talking about the overall group, right? On a consolidated basis.
Nikhil Mallavarapu
Yeah, yeah. I mean we don’t really again. Express. Exactly what the pipeline is looking like. But I can just say that, you know, we do have a healthy pipeline. And. A plan to, you know, book the business to be able to continue a healthy level of growth that we’ve been targeting. As we mentioned in the past, our medium term growth objective is to be in the range of about 18 to 20% at a consolidated level and, and at a standalone level would be higher than that. So we feel we have appropriate pipeline to be able to continue. That level. Of growth going forward. Okay.
Harshil Shethia
And sir, lastly on the CapEx front, I guess you had earlier mentioned that we’ll do a 40 crore capex in FY26. So. And that would take our gross block up to around 390400 crores. So sir, what kind of asset turns. Do you see in the business? What is our utilization level that each and every facility you can tell?
Nikhil Mallavarapu
Currently we are. No, I talk about the standalone modification because there is no capex in the subsidiary. Currently we are running around six to seven times and you know that will not significantly increase in the current year. But considering the growth from 6 to 7, we expect this to move about 8 to 9 turns in the next year or two because significant CapEx will get added to sales.
Harshil Shethia
So. So the 40 crores CapEx that you had announced on the last call will be done purely for the Indian business. Yes. Okay. And we are not pumping in any money for our subsidiary Right?
Nikhil Mallavarapu
No.
Harshil Shethia
Okay. And sir, in this gross block of around 3,83, 390 crores which will happen by the end of your end of the year, how much would be from the Indian business and how much would be from overseas subsidiary?
Nikhil Mallavarapu
You mean gross block?
Harshil Shethia
Yes sir.
Nikhil Mallavarapu
No, gross block is mostly Indian only because there is no. The people business. Because then engineering services. So there’s no major capex and.
Harshil Shethia
You know. Okay. And sir, lastly what I want to understand is in the Canada business was it ERND and BTS both or was it just from any single segment?
Nikhil Mallavarapu
Yes, today it’s largely BTS business. The history, the background over here is that this was. This used to be actually a part of Alstom in the past. It was carved out and given to the. To the subsidiary or to the company. Even before actually we acquired the French company. This is to be clear. The Canada subsidiary is the subsidiary of the French business. And it came along with the acquisition of the French business. So this was originally carved out and given as an engineering services contract for the people. And over time it was a declining contract with which was to be converted into BTS or product supply agreements with multiple different contracts and so on.
So where we are today is essentially that the level of product deliveries and the sale is not enough. The margins associated with that is not enough to justify the costs that we have in Canada. And so that’s part of the reason we’re incurring the loss. And on the other side, one of the things that we have done is also created a team in India. So we have now about 30 engineers, 30 to 40 engineers in India able to design and develop the same sort of solutions. And we’re already delivering this for Delhi and Chennai metros in India.
We won a first order even for the Vande Bharat program in the past quarter. And so you know, we are able to continue this capability from India without reliance on.
Harshil Shethia
Okay.
operator
And lastly in the print, Mr. Harshan, but I request you to rejoin the queue for the follow up question. Thank you. The next question is from the line of Vikram Sharma from NI Vishai. Please go ahead.
Vikram Sharma
Congratulations to the good numbers. My question, what is the size of this received from DID and also if you can explain about the overall opportunity size in next three to four years.
Nikhil Mallavarapu
Yeah, the size of the development order itself is relatively small. I mean it’s in the range of maybe around 10 crores or so. But these are, these are major platforms that will come subsequently. Obviously as I mentioned, just the time to design and qualify this at the platform level. For us to design and deliver this is an 18 to 24 month project and then for it to be qualified at the platform level integrated on the plane has associated with that. So in the period of three to four years, it may not directly. Huge. Orders, but subsequent to that, I mean this is one for a major platform which is the Sukhoi 13 and the size of opportunity there can be to the tune of maybe a thousand points. And the other important thing is also while we are developing this for this specific program, the technology are sort of like building blocks. So you can use these new technologies to also try to open up and create opportunities in other programs which will also be deeper. See, so yeah, that’s. It is a significant development because this is the cutting edge technology that we’ll be developing for radars and we are confident that this should open up some sizable opportunities for us going forward.
Vikram Sharma
Okay, and could you talk more on the airborne platform program briefly mentioned in the presentation? So what are the products and we are targeting.
Nikhil Mallavarapu
Yeah, so staying on this point of the radar itself, I mean this represents an important opportunity. The one I talked about in the presentation, which is for the Virupaksha program is intended for the SU30 platform. But like I was mentioning, similar type of technology, there are requirements and needs for other type of platforms including on the, on various types of UAVs, helicopters and other future next generation fighters also. So those are, those are one. Then of course, in addition to this, we are also working on certain other subsystems and technology in the radar and electronic warfare.
Vikram Sharma
Okay, and the last question on the EMS and VTS business breakup. So we have seen the 15% margin at standard. This is comparatively higher, which we like. So was there any onetime BTS business revenue contribution in this quarter? Or is, or the split is normal, we can expect in the normal. Also one thing I would say, you.
Vikram Sharma
Know, please look at the company on. The yearly basis because it’s difficult to say pull up. You know, on the whole the BBS and the EMS report, we maintain the characteristics, but during the quarter one may be higher and even product mix may be shared, etc. So the point to note is overall we should be able to maintain the same percentages that you have been. Okay, if you can.
operator
But I request you to rejoin the queue for the follow up question as there are many participants left in the queue. Thank you. Thank you. The next question is from the line of Ankit Gupta from Bamboo Capital. Please go ahead.
Ankit Gupta
Thanks for the opportunity and congratulations for a great set of numbers and you know Getting the development orders for. So you know, Nikhil, you know, we have been talking about three, four segments that we have been concentrating on the BTS side. One is the defense satellite, one is the radar, then we have EWS as well as the tank electronics. So for all the four, you know. Major segment that we have been, you know, talking about, can you give us some flavor on how are things going on the order intake side and when are we expected to get some development as well as commercial orders from the segments?
Nikhil Mallavarapu
Yeah, so if you look at the last years, last financial years, we had a, a good increase in terms of our overall order book. And that was driven essentially by a few key programs. One being a radar program itself where we had designed with DRDO in the early stage. Some of the critical TR module flanks for naval radar that came from production orders for us in the last year. We will be executing that and the same product we hope will have further. Demand. As our customer gets newer orders for these type of platforms and so on. So that’s one in terms of products that we have already, already designed and we’ve started to get the first production out as well. In addition to that, as I mentioned, in terms of new technology developments, again in this sector, we talked about the Viru Paksha order. And so we are now going to be developing significant part of the radar. So that’s on the radar front. The space side has been another area that we had some sizable orders last year. We are also anticipating some good orders coming this year from a few different programs.
So we are working hard to capture those. And then on the EW side as well, we have responded to certain large opportunities from the customers on again, airborne platforms, different things. Some of them are competitive, so we would have to wait for the results of some of these opportunities. But these are large opportunities that we have. And finally on the land systems side here again, we’ve been investing over the past few years in terms of developing equivalent solutions to imported systems and subsystems. We’ve seen some of those orders come in, even including in the current quarter.
And there are a few other key products that they are also in advanced stages of development and qualification. And we hope to have the qualification completed in this financial year and maybe the first orders for those also coming in at the end of this year or the beginning of next year, next financial year. So all in all, I think the progress is good both in terms of our development pipeline and roadmap as well as order intake coming in from key customers.
Ankit Gupta
You know, we have been trying to work directly as a system supplier to, you know, to the price services. And we were hoping that, you know, we, we were developing some products for them where the order size can be of the magnitude of around you know, 200, 300 or even 500 crores, a single order size. So how close are we to getting those contracts? Where are they in terms of terms of, you know, development stage, do you think, you know, in the coming financial year, FY26 or FY27, we should be able to back some of this large contract with this, you know, which can add to our order book substantially.
Nikhil Mallavarapu
We continue to work on some of those opportunities. I think we’ve submitted the various proposals and are waiting. The government obviously has process associated with those. So they are still in the, I would say various approval stages within the government itself. So we don’t see very short term, some of these major opportunities coming through. But I mean we continue to work on them and monitor them very closely. And as and when the processes, approval processes come through and they come out in the form of RFPs and all of that, do you. We are well positioned to be able to.
Bid on those. But having said that, again, I come back to the point of our own organic business where we have already done a lot of work and effort in terms of development and customer engagements and we are quite confident that orders coming from the there should be healthy and will support the growth of this part of the business for us in the coming few years.
Unidentified Speaker
Another part, if I were to summarize, I would say for the large opportunity, the potential is still there and the pipeline visibility improving. Yet the actual order when we get depends on the government processes which seem to be improving. But still we are not able to clearly say it will happen this year or so. As we progress and as we get more visibility, we will be able to improve. So can we expect that, you know, the, the current programs that we have on a standalone basis, our BTS revenues can grow by 20, 25% or even higher, 30% over the next two, three years.
And if we get some, some of these large services orders, you know, our BTS revenue can grow magnifold depending on if we get some of those large orders or not. And can we expect some of the wins in FY27, 28, if not this year? 26?
Nikhil Mallavarapu
Your guess is as good as mine. But yeah, all I can say is to your first point, the growth that we can see on the standalone business driven by the order book that we have, I think we are reasonably confident that we can continue to go down that path. And yes, as and when these big ticket opportunities click. It can be a step improvement also for the overall business.
Ankit Gupta
Thank you Misha.
operator
Thank you. I request each participant to ask two questions only. The next question is from the line of Rishikesh Shah from Alchemy Capital. Please go ahead.
Hrushikesh Shah
Hello? Yes.
operator
Hello, Mr. Shah. Can you speak little louder?
Hrushikesh Shah
Yeah, my question was regarding the margins this quarter.
operator
Mr. Shah, we can’t hear you properly.
Hrushikesh Shah
Hello? Hello.
operator
Yeah. Yes, please continue.
Hrushikesh Shah
Yeah, my question was regarding the margins this quarter. See our BTS segment revenue share as compared to last quarter has improved by 600 basis point. But still our margins are lower this time and BTS segment being the highest margin segment for us. What is the reason for lower margin?
operator
Mr. Shah, can you please keep the device closer to you? We can’t hear you properly.
Hrushikesh Shah
Am I audible now? No.
operator
Can you please speak little louder once again?
Hrushikesh Shah
I’ll join the queue again.
operator
Okay, sure. The next question is from the line of anant Shenoy from AS Capital. Please go ahead.
Ananth Shenoy
Good afternoon. In the 57 crore standalone BTS business. Can you give a rough split within the and the defense. And I’m getting that there is a significant and there is government is fast tracking this case based pavilion. Can you talk about the opportunity for us there?
Nikhil Mallavarapu
Yeah, first of all, I wouldn’t, you. Know. We don’t really get the breakup in terms of space and defense because in several cases we also have programs for defense which are, you know, on a space platform, for example. Right. So the way we see it is more just generally business for our domestic customers in space and defense as a whole. Having said that, I mean quite a bit of critical work in programs for the space side of the business. So we do have an important contribution coming from both parts of it. To your question about the SBS3 program, this is the budgets have just been sanctioned and a big part of it will be going to isro, after which we will come out in the form of various RFQs for private industries and so on. So these are all at different stages of maturity.
But we have been working with ISRO for a long time and we continue to look and participate in several different areas of engagement here. So we’ve read the whole thing about government asking to fast track it, but that is, you know, for us right now it’s still at the early stages of the program and we are waiting to see how these pan out in the form of different types of RFQs and opportunities for private sector industries. Sure.
Ananth Shenoy
So this order could be like one week at this order this year or do you think it will be happen next year? And can you briefly talk what is the size that we are looking for in this particular project?
Nikhil Mallavarapu
The timelines get spread over multiple years, at least two years. There are multiple different opportunities and orders that will come through. So that’s the first point to your question, the second one in terms of the PI size. This is something I’m not able to share right now. We have a view of all the different opportunities that are there. Some of them where we have unique positioning because of proprietary IP or technology that we have on our side and some which are competitive bids where we have to compete against others. So the pie itself is substantial.
We will need to see how much of that we will be booking ourselves. Sure.
Ananth Shenoy
My second question is about Yesterday in the AGM you had mentioned the three year output about asymptote 20%, the bit margins that we do in three years. Can you tell about the roadmap? How can we like on the current margins, how can we go to 18 to 20%?
Nikhil Mallavarapu
Yeah, no, just to be clear, what we talked about is 18 to 20% growth rate at a consolidated level. Not referring to this is revenue, revenue growth, not EBITDA margin. EBITDA margin, our. Our. Objective is to be at the range of 13 to 15% at a consolidated level, which today is at 8.5% or so level. So the roadmap that we see there, first of all, as you see the standalone part of the business is already at a roughly 14% level. So we expect and are working to maintain, maybe slightly, slightly improve that. But given the growth rate that we will experience in both the EMS and the winterspec business, the standalone EBITDA levels will be more or less in a similar sort of range. The opportunity for improvement will come largely from the subsidiary which today is almost like if you look at the last year, there’s a roughly 1.5% kind of EBITDA level which is dragging down the overall consolidated number.
And so the path to fixing that are fundamentally two things. One is the Canadian subsidiary which I talked about, which is a major contributor for some of the losses that we are seeing there. We are taking some action, strategic steps in discussion with our key customer there to be able to stop those losses in the coming quarter or two. And the second aspect of it, which is more on the France subsidiary where essentially the sale has reduced and that has resulted in the impact on the margins there, we are working in terms of focusing our sales efforts on the key customers in defense and aerospace where we’ve seen as the pipeline improve over the past quarter or two and we’re working in a focused way to try to convert those into opportunities and improve the sale which will help improve the margin also at the front subsidiary level.
So with all of this we are working on a roadmap that would help us improve this subsidiary margins from this 1% to try to get to a 10, 11% kind of level in roughly two year time period. And so that’s the overall plan for margin improvement I would say. Okay, thank you.
operator
Thank you. The next question is from the line of Harsh from Perpetual Capital Advisors. Please go ahead.
Harsh
Yes sir. Can you hear me?
operator
Yes, please.
Harsh
Sir, you have mentioned some NPI qualifications previously. I wanted to understand if these are tied to PNRG Semiconductor or some other sector and what is the anticipated revenue contribution from these opportunities? Yeah.
Nikhil Mallavarapu
These are basically with new customers. Just to clarify first of all when I qualification, typically when we are awarded a new business either from existing or from a new customer, we go through a qualification phase where we build prototypes and go through rigorous testing and so on. And so once those are approved then we get into mass production. So what I was referring to here was basically on two, three key customer segments. One was the semiconductor segment, another is around Biometric Security solutions and the third is again back to Defense Aerospace for export customers. So with all of this, I think for the current financial year itself, our objective is Some of these NPIs itself will add about 15 million or so in terms of revenue.
US dollars.
Harsh
16 million.
Nikhil Mallavarapu
15? Yeah, roughly about 15.
Ananth Shenoy
And what is the total opportunity over the next four, five years? How much?
Nikhil Mallavarapu
These are all pretty much recurring. Products. So these revenues may go up or down based on specific years demand from the customer. But the way we see it, EMS business is more dependent on the customer relationship than on the specific product itself. And so with these customers, what we have gone through, these NPI qualifications and so on for a certain set of products, we continue to have a pipeline of new products also which we are quoting and winning and will help to increase our engagement with these customers as we go forward into the coming years.
Harsh
That is from Nashville. Thank you.
operator
Thank you. The next question is from the line of Raman KV from Sequent Investments. Please go ahead.
Raman KV
Thank you for allowing me to ask the question, sir. I just wanted to understand. On the CAPEX front you are doing 40 crores of capex in FY26. With respect to the standalone entity, how much incremental revenue will this aid in? Historically you have been able to work with respect to. I’m just talking about the standalone entity. On a GROSS Block of 230crores you were able to do 750crores. Can we expect the same asset in. Yeah, I think it will be slightly better also. So it will be around 4 to 5 minimum on the cross block.
The next block level is what I was talking about. It can be around six to seven times. Yeah and this, this corporates with the you know revenue growth that Nikhil has been indicated indicating. So but on the. That’s like a follow up like historically our standalone entity has been growing at 25. Has been growing about 25% every year for the past at least from what I can see for the past three, two, three years. So once this block. Commences operation we can can we expect that in FY27 there will be an additional leg of growth.
Nikhil Mallavarapu
So just to explain the actual capex itself if you can’t just the BPS business. You know basically we have different set of capabilities right. So we are doing right from you know digital power, rf, you know so on and so forth. So when I say we are augmenting the capabilities we also augment the capacity in the respective capabilities. So whatever we had the capabilities that is how we have been going and going forward we are increasing the capabilities and also increasing the capacity in the existing as well as the future capabilities.
So it’s an IT process that is the reason why we should be able to maintain our cycling. Okay, thank you sir.
operator
Thank you. The next question is from the line of ABHI Mevawala from. From Vice Capital. Please go ahead.
Abhi Mevawala
Hello. Hello.
operator
Yes. Yes.
Abhi Mevawala
I just only one question related to UK subsidiary Central UK Electronics Ltd. I want to know. Basically in last two years we have invested around 30 in April 24and 45 here. So what kind of opportunity we are looking there?
Nikhil Mallavarapu
UK UK is actually a pass through. It is a special purpose vehicle. So the investment was in the French subsidiary. So if you see that you know from the center electronics parent company company we invest in the phantom UK and Centum UK is investing in the French company. So UK is not an operating entity at all.
Abhi Mevawala
Okay so basically we are investing more in France.
Nikhil Mallavarapu
France that was right?
Abhi Mevawala
Yes sir. Another point in latest quarter around my 12 year loss we incur from this up today. So how much loss we income from Canada?
Abhi Mevawala
So it’s roughly 50. 50 50% in Canada and 50% in France of the 12 crores. But whereas the revenue from Canada is very very small but the loss is quite high. So that’s the reason we are trying to stop that. So basically it’s lost from employee. Yeah, employee cost. Yes.
operator
Thank you. I request each participants to ask one question only. The next question is from the line of Ajay from Nivisha. Please go ahead.
Ajay
Hello, Open module. Yes, congratulations on good set of numbers. I wanted to understand like how is the distribution of business under the EMS segment? More on the, you know, sector sector wise, which sector are being focused over there and also is it more diversified across customer or do we have speed order from few customers? If you could highlight more on the EMS part of the business. Thank you.
Nikhil Mallavarapu
Yeah, sure. Yeah. The EMS business is certainly quite well diversified. We address customers in defense and aerospace for exports, we address industrial and energy, some medical customers and as well as the automotive or mobility kind of customers. So these are all the sectors that we’re in. And now as I mentioned, some of the newer customers that we’ve added and we’re ramping up are in the semiconductor space, semiconductor equipment and biometrics and security. So these are all the different sectors that we’re catering to. And I would say pretty much all of the business is recurring in nature.
These are products that have long life cycles and can last 10 years or more in many cases. And so we have a fairly high level of recurring in this part of the business. For us, even from a geography standpoint it’s quite well diversified. I mean we are again I would say a big part of it is for export. We have some part which is domestic but we are exporting again to Europe. We are exporting to the US to other countries, Asia, including Israel and you know, even now to countries like Malaysia, Singapore and so on.
So there’s a fairly good level of diversification in this part of the business.
Ajay
Understood. And one last question, wanted to understand more on the BTS side of things. We have been highlighting the amount of opportunity that we have available from this segment considering the vast domestic, you know, aerospace and defense sector as a whole. So any growth guidance you would be comfortable giving like how, how the segment can grow maybe two, three years down the line.
Nikhil Mallavarapu
Now we don’t give any sort of specific guidance on specific parts of the business. I think we’ve maintained that at consolidated level moving at 18 to 20% with obviously a higher growth rate coming from the standalone business. And that is a combination of both the BILT Spec and the EMS business growing at a healthy growth rate of 25/ percent that we are targeting. So that I would say at a high level for the time to come.
Ajay
Understood. Thank you very much. All the very best.
Nikhil Mallavarapu
Thank you.
operator
Thank you. The next question is from the line of Vishikesh Shah from Alchemy Capital. Please go ahead.
Hrushikesh Shah
Hi. Hope I’m audible now. Yes. Yeah. So my question was regarding our EBITDA margins. See, on a yearly basis we have done well. But on quarterly, even with our BTS segment Now contributing around 38% from 32% on quarterly basis, why are our EBITDA margins down? Because that. That’s what I was trying to say earlier. Also, you know, you cannot compare the yearly percentage to a quarterly percentage. The challenge is, you know, for example, the mix changes during the quarters. So we will be able to maintain the EBITDA margin which was indicating around 14 to 15% on a yearly basis.
Yes.
Nikhil Mallavarapu
There’s a few things that contribute to this margin. One is of course the mix of the BTS and ems, but also just the level of sales. So, you know, the fundamental point is that some of this business is lumpy in nature. So we have level of sales varying not just the percentage of the contribution, but the level of detail also that plays. So I think I would just go back to what was saying. And of course, even within each business, even within the BTS business or within the EMS business, there are different product mix which will contribute to different levels of margin variation.
Right. So.
Hrushikesh Shah
Is on consolidated basis or on standalone? Standalone. Standalone.
Nikhil Mallavarapu
14.9% for the quarter.
Hrushikesh Shah
Second question was regarding our revenue new growth. This quarter it has been only 11.
operator
But we are taking only one question per participant.
Hrushikesh Shah
Okay, got it. Thank you.
operator
Thank you. The next question is from the line of Pranav who is an individual investor. Please go ahead.
Pranav
Yeah, I have got only one question that as I understand lot of startups are also doing quite a quite well in this field of space. So. And they are working on a very niche areas. So when we are saying that this space sector is very, very interesting and the opportunity size and size with usual is talking about is around roughly 3 to 4 billion dollars. Now are we planning to work with this kind of companies or we will be working with some kind of multinational or foreign companies take on bigger huge projects in future.
Nikhil Mallavarapu
Yeah, thanks, Varnas. So in a nutshell, we are doing all three. So we are already working on partnering and working with some of these startups in different ways either by doing some of the core parts of the their satellites or in certain cases we are also with the end users working on some sort of partnership type of agreement where we will be the prime contractor and There will be certain work share that is divided between what we do and the core IP or technology that the startup brings. So that’s one aspect of it. But yeah, coming back to your question, there is the opportunity that we’re talking about in some of these key and large programs will be driven through isro and this is where our own internal keeping engagements that we have combined with some specific strategic partnerships where we are working with some global companies are both being pursued to be able to position ourselves to capture these opportunities.
And I would say from a business perspective, from our visibility at least, the biggest share of it would come either driven by our own internal capabilities or in certain very specific cases through the partnership with global companies.
Unidentified Speaker
Yeah, thank you very much. I would like to add one quick point on that. You know when we are quite open to worked with large private companies and international organizations and also the startups. See startups are something that you cannot ignore at this point of time because they bring innovation to the table. But what we do is we ensure that we don’t lose money with them. We ensure that because for every 10 startups maybe two startups succeed exceedingly well. So what we ensure is when we work with startups we ensure that we get our money on the material product.
Pranav
Yeah. So we are not going to buy them out or we are not going to enter into some kind of investment. Thank you very much.
operator
Thank you. The next question is from the line of Ananth Shenoy from AS Capital. Please go ahead.
Ananth Shenoy
Thanks for the follow up. Is there any update on Indra Scaman?
Nikhil Mallavarapu
No further update on that program. It’s still basically stalled and we have no further update from the government on this program. Thank you.
operator
Thank you. The next question is from the line of Saivijay from Capstock. Please go ahead.
Sai Vijay
Thank you sir. My question is a follow up question regarding the margins that someone had previously asked. You mentioned that the margins will vary across quarters due to different mix. So my question is our revenue recognition for grill to spec is very heavily focused on quarter four. So can we expect a more even distribution across quarters this year or would it follow similar patterns?
Nikhil Mallavarapu
Your observation is by and large if you look at in the past two, three years also the margin expansion happened in Q4 but we were a little fortunate this year I would say if you look at even Q1 I think margin was better compared to last year’s Q1.
So this year around maybe it will be distributed if not on an equal basis maybe still the higher margin probably would be dropped in the last quarter. But this year is slightly better than the previous year. Where most of it happened only in the future.
Sai Vijay
All right. Thank you, sir. All the best to the day.
operator
Thank you. We will take that as our last question for today. I now hand the conference over to the management for closing comments.
Nikhil Mallavarapu
Thank you all for participating in this earnings conference call. I hope you were able to answer your questions satisfactorily. And at the same time, offer insights into our business. If you have any further questions or would like to know more about the company. Please reach out to our investor relations managers at Valorant Advisors. Thank you. And stay safe.
Sundararajan P
Thank you.
operator
On behalf of ICICI Securities, Ltd. That concludes this conference. Thank you for joining us. And you may now disconnect your lines. Operator request has been initiated. If you’d like to cancel this request, please press star zero again.