AXISCADES - AXISCADES TECHNOLOGIES LIMITED Share Price

Management's outlook for AXISCADES Technologies Limited emphasizes a strong growth trajectory, targeting over 40% year-on-year growth. They have set an order book of Rs.1,260 crores for FY26 and Rs.1,827 crores for FY27, leading to total forecast visibility of Rs.3,087 crores. The anticipated growth is predicated on their core sectors: aerospace, defense, and ESAI.

Key forward-looking points from the management include:

1. The ambitious "Power 930" initiative aims for a revenue target of Rs.9,000 crores (approximately $1 billion) by 2030, supported by a robust pipeline and infrastructure investments amounting to around $200 million (Rs.1,500 crores) before FY27.

2. The company has secured strategic global partnerships, notably with MBDA for missile systems and Indra for radar technology. These collaborations are expected to not only enhance annuity revenue but also provide a technological advantage.

3. Financially, the company reported a consolidated revenue of Rs.244 crores for Q1 FY26, reflecting a 9% year-on-year growth. EBITDA was recorded at Rs.34 crores, with a margin of 14%. Significant growth in core verticals was observed, particularly ESAI, which grew by 34% year-on-year.

4. The management anticipates a significant ramp-up in defense revenues in H2 FY26, driven by a robust order book and enhanced procurement from Indian defense and global OEMs. The objective is a 25% revenue growth for FY26 and an expected EBITDA margin improvement of about 300 basis points over the previous year.

Overall, the management conveys confidence in execution and delivery schedules, backed by confirmed order forecasts and expanding operational capabilities across key sectors.

Here are the major questions from the Q&A section of the earnings transcript, along with detailed responses in first person:

1. Question: Can you break down the Rs.1,800 crores order book by program size, like SU 30 upgrades and delivery timelines? How are we exposed to budget cuts or delays in Indian defense procurement?

   Answer: Currently, our order book includes about Rs.540 crores in defense, comprised of OEM and MOD activities. Programs such as anti-drone systems are part of this. We have long-term visibility on these projects and do not foresee delays in execution. There are no dependencies affecting our expectations for this year or next.

2. Question: What efficiency gains can we expect from AI-empowered engineering, and will it justify premium pricing?

   Answer: We're working on AI integration in various defense projects. Results will be clearer in the next quarter as we explore efficiencies that can enhance design cycles and potentially provide justifications for pricing or market share improvement.

3. Question: How are we diversifying our business with OEMs, and what impacts do tariffs have on our operations?

   Answer: We are pursuing partnerships with more OEMs like Mubadala and Boeing to distribute revenue across various clients, reducing risk. Regarding tariffs, about 27% of our revenue is from the U.S., and we scout for strategies to mitigate risks from tariffs and dependencies on India.

4. Question: What measures are being taken for talent retention given the 19% attrition rate?

   Answer: We are enhancing employee experience and engagement initiatives and implementing significant upskilling programs focused on aerospace design and defense roles. Collaborations with external agencies are also in place to strengthen skill sets in our core domains.

5. Question: How do we plan to fund new facilities expected to contribute significantly to revenue in FY27 and FY28?

   Answer: We will develop facilities through AXISCADES Aerospace Infrastructure Private Limited, seeking strategic partners rather than borrowing or equity dilution. Initial commitments for funding are expected in Q2, with phased support planned through Q4.

6. Question: Why is the first quarter typically lower, and how does that affect contract timelines and payment cycles in defense?

   Answer: Q1 is traditionally lean due to the defense revenue cycle being normally skewed towards Q3 and Q4. Payments in defense typically follow a cycle of around 120 days, heavily reliant on customer readiness for inspections and approvals, which generally peak in H2.

7. Question: What led to the growth in ESAI, and how are we collaborating with major clients like Apple?

   Answer: Our growth in the ESAI segment is driven by new collaborations with AWS and Apple, focusing on design and development related to AI chips and related support activities. This represents a significant shift from reliance on previous partners like Texas Instruments.

8. Question: Can you clarify the projections around the Power 930 plan and how realistic it is to achieve those growth rates?

   Answer: Our target is ambitious, aiming for Rs.9,000 crores by 2030, backed by systematic planning and substantial investments in infrastructure. We anticipate growth rates of 40%-45% for the next two years, followed by a sharp increase driven by customer acquisitions and infrastructure readiness.

These responses are crafted to encapsulate key financial metrics, growth strategies, and operational insights shared during the earnings call.