Centum Electronics - Readying for Takeoff: Edelweiss PDF link

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We met management of Centum Electronics (CTE) to understand the company’s business and its prospects in defence. Given a favourable policy framework in defence and focus on indigenisation, we believe the domestic defence sector is likely to throw up significant manufacturing opportunities for the domestic players. CTE is in the business of design and manufacture of modules, systems and subsystems through its electronic products in four key verticals – Strategic Electronics (space, defence and aerospace), Industrial, Communications and Medical. The company’s association with DRDO, DPSU and few global OEMs will help scale up its defence business. With a strong design team with over 100 engineers, CTE will focus on built-to-specs (BTS), which has better profitability than built-to-print.

Favourable policy framework; focus on surveillance systems, radars

There is more dynamism in the defence business with a favourable policy framework in place along with special emphasis on defence indigenisation. The domestic players are in a sweet spot to tap the upcoming opportunities likely to come from large defence spending over the next few years. With the DPSUs focusing on integration, significant outsourcing opportunities in addition to offsets are likely to come up. With four manufacturing facilities and CTE’s focus on R&D augurs well as the company scouts for more business from BTS. Given strong demand for components in surveillance systems and radars, the company is working towards radio frequency/microwave technology for radar subsystems. In communication, subsidiary Centum Rakon plans to tap the market for frequency control products, critical equipment for telecom infrastructure with its market pegged at USD2.7bn and growing at 20% annually.

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https://www.edelweiss.in/research/Centum-Electronics--Readying-for-Takeoff/27169.html