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Centum Electronics Ltd., a Bengaluru-based defence and aerospace technology firm, witnessed a strong rally in its stock price on Friday, May 23, with shares surging 10% to ₹2,264. The spike came after the company reported a significant turnaround in its financials for the March 2025 quarter, marking a return to profitability and bolstering investor sentiment.

Q4 Performance: A Strong Financial Rebound

For the quarter ended March 31, 2025, Centum Electronics posted a consolidated net profit of ₹22 crore, a substantial improvement from a net loss of ₹7 crore in the same quarter last year. The company also reported a 24.2% year-on-year growth in revenue, reaching ₹369 crore—up from ₹297 crore in Q4 FY24.

Operating performance showed a strong uptick as well. EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation) more than doubled to ₹42 crore compared to the previous year. The EBITDA margin improved sharply by over 500 basis points, rising to 11.3% from 6.1%, reflecting improved operational efficiency and cost control.

Defence and Aerospace: Key Growth Drivers

A large part of the company's growth is driven by its focus on defence and aerospace solutions. As of March-end, Centum’s order book stood at an impressive ₹1,861 crore, with approximately 51% of this stemming from the defence and aerospace sector.

Centum is deeply embedded in India’s strategic defence ecosystem, delivering technologies for:

• Missile control and guidance subsystems
• Radar control subsystems
• Tank and combat vehicle electronics
• Satellite payloads and subsystems
• Electronic warfare systems

The growing defence expenditure by the Indian government and rising demand for indigenous systems under the "Make in India" initiative have played a significant role in boosting Centum’s business.

Strong Investor Backing: Prashant Jain’s 5.5% Stake

Veteran fund manager Prashant Jain, formerly with HDFC Mutual Fund and now managing the 3P India Equity Fund, holds a cumulative stake of nearly 5.5% in Centum Electronics through two of his funds, as of March 31, 2025. Jain is known for his long-term bets on fundamentally strong companies, and his backing has further enhanced investor trust in Centum.

Notably, more than 17,000 retail investors, each with authorised capital up to ₹2 lakh, collectively hold an 11.76% stake in the company—highlighting growing retail participation in defence-sector equities.

Stock Performance: A Multi-Year Growth Story

Centum’s stock has delivered exceptional returns for its investors. Over the last one month alone, the stock has surged 33%, driven by robust earnings and positive sentiment in the defence space. Over a five-year period, the stock has delivered a staggering 900% return, solidifying its reputation as a high-growth opportunity in the Indian stock market.

The company currently boasts a market capitalization of over ₹3,000 crore, positioning it as a mid-cap stock with strong upward potential, especially as India continues to ramp up indigenous defence production.

Broader Industry Tailwinds

According to SIPRI (Stockholm International Peace Research Institute), India remains one of the world’s largest defence importers but is actively pivoting toward domestic defence manufacturing. The Indian defence budget for FY25 saw an 8.6% increase, with a significant portion allocated to domestic procurement. This environment provides fertile ground for firms like Centum Electronics to thrive.

Moreover, the Indian government's Production-Linked Incentive (PLI) scheme and defence offset policy further incentivize indigenous manufacturing and R&D capabilities in the sector.

Centum’s Comeback Signals Confidence in India’s Defence Tech

Centum Electronics' sharp Q4 comeback, coupled with strong fundamentals, a high-value order book, and strategic backing from top fund managers, signals a promising trajectory. For investors eyeing long-term opportunities in India’s high-tech defence manufacturing space, Centum remains a stock to watch.

As global and domestic defence spending continues to rise, companies like Centum Electronics are poised to be key beneficiaries, making them vital players in India’s mission toward self-reliance in critical technologies.

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