CARE Ratings has upgraded Centum Electronics' long-term bank facilities to CARE BBB+ (Stable) and short-term to CARE A2. The upgrade follows the company's decision to liquidate loss-making overseas subsidiaries, effectively de-risking its balance sheet. With a robust order book of Rs 1,797 crore as of June 2026, the company is shifting its focus toward higher-margin defense and space projects, signaling a stronger operational outlook for investors.
Centum Electronics Credit Rating Upgraded
CARE BBB+; Stable for long-term facilities; CARE A2 for short-term facilities.
Rs 1,797 crore order book as of June 30, 2026.
Reader Takeaway: The exit from loss-making UK subsidiaries improves financial health, but high working capital needs remain a hurdle.
What just happened
CARE Ratings Limited has upgraded the credit ratings of Centum Electronics Ltd (CEL), citing the strategic move to discontinue and liquidate its loss-making overseas subsidiaries under Centum Electronics UK Limited. These entities are no longer being consolidated into the parent's financials as of Q1FY27, leading to a shift toward a standalone analytical approach.
Why this matters
The rating agency noted that the removal of these loss-incurring entities significantly reduces financial drag on the parent company. This de-risking move allows the market to focus on CEL's core Indian operations, which are increasingly dominated by the high-margin Build to Specification (BTS) segment serving the defence and space sectors.
The backstory
Centum Electronics faced a challenging FY26, recording a net loss primarily due to one-time exceptional charges of Rs 203.4 crore related to subsidiary write-offs and inventory provisions. The current upgrade marks a pivotal shift for the company, moving away from these legacy issues toward a more focused growth strategy.
Context metrics
- Order Book: Rs 1,797 crore (June 2026) versus Rs 1,645 crore (March 2026) and Rs 1,341 crore (March 2025).
- Working Capital Utilization: 67% over the 12 months ended July 2026.
- Revenue Growth Target: CARE Ratings projects a 20%-25% CAGR in the medium term.
Risks to watch
Investors should remain cautious of the inherently working capital-intensive nature of the BTS segment. The electronics manufacturing services (EMS) industry also faces intense competition and margin pressure. Additionally, since the company imports significant raw materials, volatility in foreign exchange rates remains a persistent risk factor, despite existing hedging strategies.