Financial Performance Highlights

Q2 FY27 Consolidated Results:

  • Revenue from operations: ₹417 crores (compared to ₹374 crores in Q1 FY27, representing 11.4% quarter-on-quarter growth)
  • Operational EBITDA: ₹82.28 crores (compared to ₹61 crores in Q1 FY27)
  • EBITDA margin: 19.7%
  • Profit after tax (excluding share of profit/loss from associate companies): ₹48.6 crores (compared to ₹35.41 crores in Q1 FY27)

Strategic Business Updates

Global Aerospace Platform Strengthening:

  • Completed acquisition of Bromford Precision Solutions in the UK
  • Bromford and Nasmyth together provide a meaningful UK platform integrated with India operations
  • Sri City facility commenced production in September 2026, already rolling out parts to UK and customers
  • Facility expected to be central to margin improvement over time

Artillery Ammunition Business:

  • Progressed from fuses to shell bodies to advanced products and solutions
  • Entered collaboration with Munitions India Limited for course correction technology (well-proven globally)
  • Received repeat orders from international customers reflecting execution confidence

Control Systems Expansion:

  • Expanded into control systems for homeland security beyond military applications
  • Received orders from Government of India for Indrajal Ranger, a vehicle-based anti-drone solution
  • Previously delivered secure orders to Army and Navy successfully

Order Book and Visibility

  • Total order book: Over ₹10,000 crores
  • International orders: 90% of total order book
  • Provides strong long-term visibility

Financial Guidance

FY27 Targets:

  • Revenue: ₹1,900-2,000 crores
  • EBITDA margin: ~20%
  • EBITDA margin improvement target: 200-400 basis points by end of FY27
  • Additional 400-600 basis points improvement by end of FY28

Operational Metrics and Investments

UK Operations Investment:

  • Total investment in Nasmyth and Bromford: £8-9 million
  • Investment includes working capital infusion and capex for new equipment
  • Operational metrics improvement: On-time-in-full (OTIF) increased from 65% to 97% over recent quarters
  • UK operations showing 200% per quarter improvement in EBITDA margin

Capacity Utilization:

  • Aerospace capacity utilization in India: ~15% (expected to grow rapidly)
  • Ammunition capacity utilization: ~20%
  • Electronics business running single shift with current infrastructure expansion
  • Sri City facility expected to reach 50-60% capacity utilization by end of FY28

Fundraising Plans

  • Planning to raise up to ₹3,000 crores
  • Primary purpose: Fuel growth through M&A and new acquisitions
  • Timing: Expected to close transactions in Q4 FY27, subject to shareholder approvals
  • Current cash position: ₹350 crores (including portion from preferential placement in June)
  • Working capital: Adequate lines from financial institutions, no additional funding required

Acquisition Strategy

  • Targeting companies with revenue of $100-150 million
  • Looking at opportunities across UK, European, and US geographies
  • Focus on companies that are EBITDA positive with good customer base
  • Strategy: Horizontal and vertical integration with customer penetration
  • Timeline: Potential closures in Q4 FY27

Debt Position

  • Current debt: ~₹80 crores
  • Term borrowings: ₹76 crores (repayment strategy not finalized)
  • Additional term borrowings with scheduled payback from January 1 to December 31, 2027
  • Characterized as almost debt-free with most debt being working capital related

Manufacturing Transfer Strategy

  • Transferring manufacturing from UK to India for margin improvement
  • Target split: 30% retained in UK, 70% moved to India
  • 25-30% of UK revenue comes from defense business that cannot be moved due to restrictions
  • India manufacturing acting as subcontractor to UK operations for P&L reporting

Margin Expansion Outlook

  • Targeting aerospace EBITDA margins of 25-30% by FY28
  • Current lower aerospace margins due to UK overhead costs and capital base
  • Expecting competitive or higher margins than Indian aerospace players by FY28

Market Environment Assessment

  • Supportive environment across markets
  • Global aerospace OEMs looking to India for engineering depth and scale
  • NATO and allied nations strengthening ammunition manufacturing capacity
  • Counter-drone capability becoming part of everyday security requirements
  • Indian government emphasizing indigenous defense manufacturing

#Tags #SigmaAdvancedSystems #Q2FY27Results #EarningsCall #DefenseExports #AerospaceManufacturing #M&AStrategy #Neutral