Financial Performance Highlights

H1 FY27 Performance (April-September 2026)

  • Revenue from operations: INR219 crores (significantly higher than INR77 crores in H1 FY26)
  • Gross margin: INR75 crores (87% higher than INR40 crores in H1 FY26)
  • Gross margin percentage: 34.62% (lower than 51% in FY26 due to product mix)
  • EBITDA: INR31.15 crores with EBITDA margin of 14.2%
  • Profit After Tax: INR5.8 crores with PAT margin of 2.61%

Q2 FY27 Performance (July-September 2026)

  • Revenue: INR183 crores
  • EBITDA: INR44 crores with EBITDA margin of 24.11%
  • Profit After Tax: INR23.5 crores with PAT margin of 12.71%

Revenue Composition

  • Export revenue: 35% of H1 revenue
  • Domestic revenue: 65% of H1 revenue
  • Management noted historical quarter-on-quarter revenue volatility is normal for the business

Order Book & Business Outlook

  • Current order book: INR250 crores as of September 30, 2026
  • Contracts under negotiation: INR408 crores
  • Qualified pipeline opportunities expected to convert in next 2-3 months
  • H2 FY27 revenues expected to be "materially better" than H1 based on order book and pipeline
  • The business is best evaluated on an annual basis due to quarterly volatility

Business Segments & Strategy

Tactical Systems (70-80% of current business)

  • Thermal weapon sights, hand-held thermal imagers, night vision equipment
  • Stated Indian requirement: ~80,000 thermal weapon sights + 27,000 image intensifier sights
  • International near-term opportunities: ~10,000 thermal sights and monoculars
  • Delivery timeline: 3-6 months from order receipt
  • Domestic gross margins: 40-45%

Platform Systems (growing segment)

  • Gimbals, fire control systems, weapon stations, seekers
  • Applications: land vehicles, naval vessels, airborne reconnaissance, missile systems
  • Delivery timeline: 6-18 months from order receipt
  • Domestic gross margins: 45-50%
  • Recent win: Strategic export order from European state-owned company for multi-sensor stabilized seeker for loitering munition program
  • Option for additional orders up to EUR 13 million upon acceptance of initial units

Directed Energy Weapons (Development Phase)

  • High-power microwave systems for counter-drone applications
  • Technology Readiness Level: TRL 4 (product engineering phase)
  • First delivery expected in 2029-2030
  • Total project cost: INR160 crores
  • Funding: INR120 crores EXIM loan, INR25 crores iDEX ADITI grant, INR15 crores from balance sheet
  • Letters of Intent: 11 units (5 for Indian Navy, 6 for European customer)
  • Indian market size: ~140 systems at ~INR200 crores each (INR28,000 crores total)
  • Global TAM: USD3.82 billion by 2030 at 50% CAGR

Balance Sheet & Financing

  • Net worth: INR564 crores as of September 30, 2026
  • Bank borrowings: INR169 crores for working capital (self-liquidating)
  • Post-quarter update: One bank increased cash credit limit from INR30 crores to INR50 crores
  • Working to increase limits with other two banks

R&D Investment Strategy

  • Total R&D spend in H1 FY27: ~INR16 crores (INR3 crores expensed, INR13 crores capitalized)
  • Full-year R&D expected: ~INR30 crores (~INR25 crores capitalized)
  • HPM project: INR160 crores total investment over 2.5 years (INR120 crores materials, INR20 crores employee costs capitalized)
  • Capitalization policy: Expenses capitalized when technology risk is de-risked and customer intent exists

Market Opportunities

Domestic Opportunities

  • Indian Army requirement: 80,000 thermal weapon sights + 27,000 image intensifier sights
  • Procurement through both Capital Procurement (longer cycle) and OCPP (faster, under 12 months)
  • Platform integration opportunities: See-through armor for BMPs, light tanks, armored vehicles
  • Electro-optical fire control systems for remote-controlled weapon stations
  • Counter-drone applications for Army and Navy
  • Precision guidance seekers for anti-tank guided missiles and loitering munitions

International Opportunities

  • European rearmament budget: EUR 800 billion over 5-10 years
  • Already supplying to 24 countries with over 28,000 systems in service
  • 20,000 thermal sights in Indian service, 15,000 in European service
  • Israeli and French special forces using company's night vision binoculars
  • Programs across Armenia, Morocco, Jordan won in global competitions

Competitive Positioning

  • 100% proprietary IP built over 15+ years of R&D
  • 130+ engineers in R&D
  • ITAR-free (no US export restrictions)
  • Fabless manufacturing model through certified partners
  • Market share: ~65% of 30,000 thermal weapon sights deployed in India
  • Key differentiator: Ownership of IP across value chain (optical designs, sensor electronics, video processing, fire control)
  • Primary Indian competitors: Bharat Electronics, Tata, Alpha Design Technologies
  • Directed energy weapons: No credible Indian competitors

Management Commentary

  • Business performance should be evaluated annually rather than quarterly due to revenue volatility
  • Company follows "global first" strategy - prove products overseas then drive adoption in India
  • Building directed energy weapons as a strategic option for long-term growth, not short-term revenue
  • Focus on democratizing autonomy at military performance levels with cost-effective solutions
  • The decisive edge in modern warfare is better sensors, edge AI, and more autonomous platforms