AXISCADES Technologies Limited ($532395)

Ladies and gentlemen, good afternoon. Welcome to AXISCADES Technologies Limited's Q4 and FY '26 Earnings Webinar produced by ElevEase. So I'm Shankhini, Director of Investor Relations from Dickenson, IR Advisors to AXISCADES, and I'll be moderating our call today. Please note that this conference is being recorded and that some statements in this call may be forward-looking based on current expectations and subject to risks that could cause results to differ materially. You can download AXISCADES' investor presentation and press release from the links in the chat or from the company website or the NSE. Perfect. So I'll now hand the conference over to Mr. Mukund Santhanam, Chief Growth Officer and Head of IR, to begin with opening remarks. Take it away, Mukund.

Thank you, Shankhini. Thanks, everyone, for joining us today. I hope all of you have had the opportunity to review our results, our investor presentation and the press release, which have been filed with the exchanges. FY '26 has been a very eventful and important year for AXISCADES. It has been a year in which we delivered full year growth, but more importantly, it's also been a year of strategic transition. We have taken decisive steps to sharpen the portfolio to strengthen our focus on our core areas of aerospace, defense, space, deep tech, electronics and AI and to build the foundation for the next phase of growth under the Power 930 roadmap. At the same time, we recognize that you will have questions regarding our latest quarterly results and the bridge into FY '27. The management team will address these areas directly today. Our object is to be transparent on the quarter, to be clear on the bridge into next year and to be disciplined in explaining how we are approaching execution in FY '27. On the call today, we have Dr. Sampath Ravinarayanan, Founder, Chairman and Managing Director of AXISCADES. We have Shashidhar S.K., our Group CFO. We also have other members of the senior leadership team across our key business areas of aerospace, defense and electronics as well as some of our leaders across finance, operations and strategy. The structure of the call will be as follows. I will now first hand over to Dr. SRN for the opening remarks on the strategic direction of the company and the transformation underway. After that, Shashi, our Group CFO, will take us through the financial performance, the Q4 bridge and key balance sheet income and cash flow points. After that, we will open the floor for questions. During the Q&A, I will moderate the answer flow. I'll route questions to relevant members of the management team. As you can imagine, some of the areas that we work in, particularly defense programs, are extremely commercially and program sensitive. And therefore, certain customer-specific matters or live strategic initiatives, we will answer those questions at the appropriate level of disclosure. With that, I now invite Dr. SRN to share his opening remarks. Dr. SRN, over to you.

Thank you, Mukund. Good evening. Thank you for joining us today. Let me begin with the direct and honest assessment. In FY '26, we did everything we set out to do, except 2 things, which got deferred, not canceled, but deferred. First, a portion of our revenue shifted due to global supply chain disruptions. That revenue is not lost. The orders are intact. The products are getting ready. We will deliver them after our customers confirm their acceptance slots and conduct inspection. This is a matter of scheduling, not demand. Second, Phase 2 of our digital investment, which is central to our restructuring plan. It has delayed a bit. It will happen soon. The strategic rationale is unchanged. The process is active, and it remains a priority for H1 FY '27. Everything else, every capacity investment, every design win, every new initiative, every customer relationship happened as planned. I want that to be absolutely clear before we go any further. FY '26 has been the most consequential year in the 20-year history of AXISCADES, not because one of the quarter numbers because of what we built. We did not have a bad year. We had a building year. There is a fundamental difference. We set out on Power 930, a clear nonnegotiable target of INR 9,000 crores of revenue by FY 2030. Delivering that demands deliberate significant and disruptive shifts across the company. Every one of those shifts was initiated in FY '26. Earlier this week, we signed the divestment of Phase 1 of our engineering services business, heavy engineering, energy and automotive. This is only the beginning. Further restructuring is underway and planned for H1 '27. We are not shrinking. We are sharpening. Every rupee of revenue we remove from engineering services gets reinvested into businesses with structurally higher margin, longer life cycles and stronger strategic moats. Our Devanahalli campuses and our Missile Atmanirbhar Complex, MAC, in Hyderabad will become operational through FY '27. We have initiated expansion beyond them. Together, they give us far larger and more capable manufacturing, testing and MRO footprint. We are also in advanced stages of finalizing an aerospace manufacturing acquisition that will jump-start high-value manufacturing activities in Q3 of FY '27. To fill this capacity, FY '26 was our strongest year yet for building relationship with global OEMs. We carry a powerful pipeline into FY '27. We have initiated the creation of Xida, Inc. Xida, Inc. is American-led Silicon Valley headquarters, deep tech and AI company, a subsidiary of AXISCADES, but designed from day 1 to think, operate and scale like a U.S. technology company. American leadership, American speed, American ambition and Indian and Vietnamese engineering depth as a competitive advantage. Xida is designed to be a hardware electronics-driven AI company operating inside the golden triangle of data centers, generative AI and physical AI is what whole world is investing into. It is American-led, autonomously run and strengthened by 2 acquisitions we are evaluating. Our existing ESAI business, it's not a new company. All our existing ESAI business under AI team will move into Xida, giving it an immediate revenue, customers and credibility. We have established a space division. Our space situational awareness initiative with Aldoria is underway, and we are evaluating strategic partnership for space-related, especially spacebus and space payload manufacturing at our Devanahalli campus. We already started building infrastructure for the same. What emerging -- what emerges from these shifts are not incremental improvement. It is a transformation, a sharper in focus, higher in margin and value, global in reach, scalable in foundation, AXISCADES operating at the cutting edge of the domains that matter to most -- that matter most to India and the world, defense, aerospace, space and deep tech company built not on ambition alone, but on the foundation we laid brick by brick in FY '26 to every shareholder, customer, employee, partner. I want to reiterate this. We built a runway in FY '26, FY '27 is the takeoff. Before I complete my speech, I want to set one frame of reference that I believe is essential to understanding where AXISCADES stands today. FY '26 and FY '27 are not 2 separate chapters. They are 2 acts of the same story. Think of Bahubali. Part 1 ended with a question that only part 2 could answer. Think of Dhurandhar, the first part built a position so intricate that only a sequel could reveal what it all meant. In both cases, judging the first part in isolation would miss the entire point. That's exactly where we are. FY '26 and FY '27, viewed together will provide the answers. I'm here today to lay a full picture. There is a famous saying attributed to Benjamin Graham, the father of value investing. He said, in the short run, the market is a voting machine. In the long run, it is a weighing machine. I would urge every investor in this room to weigh what we have built, not vote on 1 quarter. I like every -- like every great 2-part story, the second act will make the first one worth it. I ask you to stay with the full story. The best of AXISCADES is not behind us. It is directly ahead. Thank you for all your support. Over to you, Shashi.

Hi Shashi, we can start with your opening remarks.

Yes. Sorry, I was on mute. Thank you, Dr. SRN. Good evening, everyone. And Dr. SRN gave a very apt description of taking FY '26 as well as FY '27 together. Let me start on that note. And let me say that FY '26 was a strong operating year and a demanding transition year. And we had 3 quarters of very strong exceptional performance. And of course, as what Dr. SRN said, Q4 may be an outlier in terms of how we ended the year. Talking about the full year, the revenue grew 12.4%, EBITDA grew 24.6% and EBITDA margin expanded 150 basis points to 15.3%. The reported PAT did not reflect that operating progress. I will explain the bridge in 3 parts: a material Q4 revenue recognition deferment, onetime transaction and exceptional items linked to the portfolio restructuring, and a tax base that is not comparable with FY '25. Then I will explain why FY '27 starts from a different operating base with a cleaner portfolio, stronger core domain mix and tighter focus on cash, working capital and execution. At the full year level, the operating results are unambiguous. The revenue was at INR 1,159 crores, a 12.4% growth year-on-year. EBITDA was at INR 178 crores, a 24.6% year-on-year growth with margins at 15.3%, which is 150 bps more than last year. The profit before tax before exceptional items was INR 125 crores, which is 36.5% growth year-on-year. The profit before tax after exceptional items was at INR 114 crores, which was 29.8% growth year-on-year. The normalized PAT came at INR 83 crores which is 27.6% year-on-year versus normalized FY '25 PAT of INR 65 crores. And of course, the reported PAT at INR 72 crores was about 4.3% degrowth year-on-year, which we will explain in the following, I would say, definitions. For Q4 specifically, reported revenue was INR 273 crores. EBITDA was INR 34 crores, pre-exceptional PBT was INR 14 crores and PAT was at INR 0.4 crores. So before we move into questions, I want to directly bridge the difference between the underlying operating performance and the reported PAT outcome. At the operating level, revenue, full year EBITDA, EBIT and pre-exceptional PBT all grew. However, reported PAT did not reflect the trajectory because 3 items affected the quarter and the year-end reported number. First, the Q4 revenue recognition shift of INR 142 crores, which also carried an EBITDA impact of more than INR 40 crores; second, portfolio restructuring and exceptional impacts linked to the strategic divestment process; and thirdly, a noncomparable tax base versus the FY '25 tax. We had earlier worked with an EBITDA expectation of around INR 215 crores and PAT expectation of around INR 110 crores. The shortfall against that expectation is substantially explained by these bridge items. Importantly, the revenue recognition movement is a scheduling issue. The restructuring impact is linked to a deliberate portfolio action and the tax comparison is affected by the FY '25 base. That is why the reported PAT number should be read with this bridge rather than as a reflection of the underlying operating direction of the business. Now as to factor 1, which is Q4 revenue deferment, which had an impact of INR 142 crores in revenue and about INR 40 crores of EBITDA. The INR 142 crores of Q4 revenue could not be recognized before year-end. The issue was timing and execution, not demand erosion. The underlying contract values remain intact and the customer relationships remain unaffected. The revenue has moved into FY '27 visibility with recognition expected across Q1, Q2, subject to delivery, inspection, customer acceptance and applicable revenue recognition criteria. Now the second matter with respect to the INR 45 crores. In this INR 142 crores, I'm just giving a breakup how this INR 142 crores is stacked up. The first revenue deferment was of INR 45 crores, which was a defense manufacturing program. Supply chain disruption to a critical input material affected production time lines on land systems order for the Ministry of Defense. The supplier constraint has since been resolved. The next item is an INR 84 crore revenue deferment, which is pertaining to our strategic electronics program. Our monopolistic hardware supplier redirected output to war-related priority programs, thereby impacting the production. The input materials have since been secured. The last one being the INR 12.6 crore aerospace and defense contract, the deferment arising directly from the Akkodis divestment transaction, a contract designated as a strategic for retention, which was deferred during the transition. The broader learning from Q4 is clear. As AXISCADES moves from engineering-led delivery model to manufacturing-linked execution, we need stronger supply chain buffers, acceptance slot planning and program management discipline. Those actions are being built into the FY '27 execution cadence. In terms of factor 2, which is an exceptional item, which had an impact of INR 11.17 crores, on 26th May 2026, AXISCADES signed definitive agreements to divest the heavy engineering, energy and automotive engineering service practice to Akkodis for USD 30.63 million in cash pretax. The transaction is expected to close in Q2 FY '27, subject to closing conditions. The strategic point is portfolio sharpening. These activities are not core to the Power 930 architecture and the transaction releases capital and management bandwidth for aerospace, defense, space and deep tech AI-led priorities. And this particular transaction entailed transaction and restructuring cost of INR 9.8 crores, which was directly expensed into P&L. And there was also a fair value adjustment on divested business of INR 7.98 crores, which was recognized under exceptional items, and this pertains to EPCOGEN, which was sold at less than book value in view of various reasons. These are portfolio reset costs and should not be considered as recurring operational costs. They also explain part of FY '26 PAT bridge and should be separated from the revenue trajectory. On closure, which is -- of this particular transaction with Akkodis, which is expected in Q2 FY '27, the divestment is expected to result in an extraordinary gain of approximately INR 175 crores, which is -- which will translate to a INR 41 per share EPS. In that context, the INR 17.78 crores recognized in FY '26 should be viewed as a onetime cost incurred to unlock a substantially larger value creation event. The last one being the tax charge not comparable year-on-year. The tax charge in FY '26 is INR 42 crores against INR 12 crores in FY '25. The previous year FY '25 net tax included a onetime reversal of INR 10.01 crores from a favorable income tax order. FY '26 reflects a normalized tax position. The average tax rate appears to be higher at 36% for FY '26 as the profits in some of our overseas entities carry a higher tax rate and also the fact that the company was not able to recognize deferred tax asset in one of our loss-making entities in Germany. Now coming to balance sheet and cash flow. Let me address the balance sheet and cash flow directly because receivables, current borrowings and operating cash flow are fair investor questions. Three items require context. The first one being receivables, elevated at year-end, but resolved since. The closing receivables were at INR 411 crores with a DSO of 130 days, which looks elevated. Since March, we have already collected INR 155 crores from these receivables. And as a reference point, the DSO is now 81 days. The year-end position was a timing issue, not a collection issue. The collection has since happened. The second one being the operating cash flow, a program timing issue, not a structural problem. The operating cash flow was negative, driven entirely by about INR 100 crores of Land Systems WhAP classified under other assets. This is contracted with the Ministry of Defense and with 20 units ready for dispatch, 25 at assembly stage and 85 in production. The pre-dispatch inspection by the MOD is currently in progress. The dispatch and invoicing are scheduled for Q1 -- Q2 FY '27. The cash flow upticks in FY '26 reflect a program in its execution phase, not a deterioration in cash generation capacity. So the EBITDA to cash conversion deficit in FY '26 is almost entirely explained by the INR 142 crores of revenue deferment and the unbilled revenue buildup in current assets of around INR 100-odd crores. When these programs deliver and collect in H1 '27, approximately INR 120 crores to INR 140 crores of cash will be released into the system. The business has consistently generated strong operating cash in prior years, and this pattern will resume. And now coming to borrowings and CapEx. These are all purposeful and self-funded. The gross borrowings increased by INR 87 crores from INR 189 crores to INR 276 crores. This was a project-specific working capital raised for land systems. It retires as program invoices from Q2 FY '27. The INR 96 crores invested in DAL, DAC, MAC facilities were funded entirely by internal accruals. The total assets moved from INR 1,127 crores to INR 1,466 crores. The consolidated net worth stands at INR 734 crores. The Hyderabad facility, which is around 8.2 acres of land, where we have paid about INR 40-odd crores, which is the full value of the land and the Euroland facility, which is 165,000 square feet, which is a new lease with Eero Electronics are reflected in noncurrent assets and the right-of-use assets, respectively. Both are operational infrastructure investments and not speculative. Now coming to the domain mix after the transaction with Akkodis, there is a strategic shift, which is very visible in the numbers. The core domains of aerospace, defense and ESAI generated approximately INR 904 crores in FY '26 revenue, representing around 78% of consolidated revenue. The domain level contribution is important because it shows the portfolio moving towards businesses that are strategically relevant and of higher value. Coming to each of these domains, the Aerospace generated a revenue of INR 388 crores, which is a 21% growth year-on-year with a 17.3% EBITDA margin. And coming to defense, the revenues were at INR 379 crores, which is a 25% year-on-year growth and with EBITDA margin of 22.9%. And the ESAI domain generated a revenue of INR 136 crores with a year-on-year growth of 9% and EBITDA margin being 26.1%. So the overall margin profile of the company is improving from a lower margin perspective to a higher margin perspective and the manufacturing-linked execution scale as what we are trying to adopt. So coming to FY '27, and we now -- which is very structurally different. So FY '27 is not simply a recovery story. It's a year in which with the retained portfolio, Q4 carryforward divestment proceeds and DAL, DAC, MAC infrastructure start converting against milestones. Three things change at the starting line. First, the deferred INR 142 crores is order linked carryforward, not a new pipeline. It enters FY '27 as hard orders under execution, scheduled for recognition in Q1 and Q2. It is not a forecast assumption. It is in the dispatch queue. The second aspect is the FY '26 transaction exceptional impacts do not repeat in the same form. The third one being the divested businesses exit in the P&L and release capital and management bandwidth. The portfolio is cleaner. The cost base is being reset and the management bandwidth is being directed towards aerospace, defense, space and deep tech AI platforms. As already I mentioned, there will be an extraordinary gain of around INR 175 crores when the transaction closes by about July, August of this year. Now coming to the revenue visibility. Revenue visibility is something where the consolidated FY '27 revenue trending towards INR 1,377 crores representing a 52% growth on the retained business base of INR 903 crores in FY '26. The INR 927 crores in order currently under execution, the INR 142 crores deferred from Q4 FY '26 sits within the INR 927 crore order under execution bucket. INR 285 crores in assured forecast visibility programs where designs have been won and AXISCADES holds a qualified sole source or limited source supplier status. Conversion remains subject to customer procurement time lines and budget approvals. The INR 165 crores of acquisition-linked visibility comprising the ESAI and Aerospace acquisition components disclosed in the investor presentation. And of course, this depends on the transaction closing, integration and timing. In closing, I would want to say that the FY '27 bridge is visible. Its integrity will now be established through execution, conversion of deferred revenue in Q1, Q2, cash collection, working capital unwind, disciplined CapEx deployment and milestone-led progress of Power 930. We'll report that progress transparently through our normal quarterly results and regulatory disclosures. I will now hand back the mic to the moderator to open the floor for questions. Thank you.

We'll now start with the questions. [Operator Instructions] So we'll start with our first question. Our first question will be from the line of Nikhil Chandak. [Operator Instructions].

I have only one question, which is I wanted some clarity on your FY 2030 vision of $1 billion revenues. Now if I look at the '26 revenue, say, roughly INR 900 crores to INR 9,000 crores is a 10x jump in the next 4 years. So what would this 2030 revenue target now get scaled down to? Or you still think this is organically achievable in the next 4 years?

I'll take this question. This is SRN here. Nikhil, thank you for this. As you know, when we -- predominantly, we are a design-based revenue. When we go to manufacturing, it's automatically a 10x, 20x design -- if I convert all the design wins to manufacturing or instead of design, I take a manufacturing, it is very, very high value in 10x. So predominantly, what we are planning to do is every design, everything what we are doing before getting into a manufacturing. We are building an ecosystem that can manufacture these things. So automatically, we are not scaling it down. We are sticking to INR 9,000 crores. We are -- because it's all foundational year, the years -- you cannot see the scale right now because the buildings are yet to be completed. Order books are coming up. We are building the order books, and we are working towards it. Every aspect, we are moving from design only to manufacturing. For example, ESAI, we used to take only design work from hyperscalers and large companies. Today, we are insisting for design cum manufacturing. We have enrolled with the large companies, the biggest consumer technology company in the world as a manufacturing -- design cum manufacturing, manufacturing MSA. From the -- earlier it was design MSA. So we moved it. So basically, we are gearing up for as a manufacturing partner or a solutions systems partner. So this automatically ensures a 10x scale up on what we do exactly. So that's my answer. We are not scaling it down. But as you said, can you see this right now? This is like because of the total -- the way we are shifting the business from one to another, it looks like we are not reaching there, but we are there. So the real momentum will start happening from this year, the order books and so on. So we are very confident. We can see that. We are absolutely -- this thing. We have a strong customer base. We have a strong pipeline, and we are totally moving towards the manufacturing and solutions. And the infrastructure getting ready. By this year-end, I will have -- DAL is already ready. DAC and MAC will be ready. Hopefully, we should start complete manufacturing immediately, okay? Thank you.

Our next participant asking a question will be from the line of Rohan Mehta.

Am I audible?

Yes, please go ahead.

So adjusting for the revenue deferment and related EBITDA impact, your normalized EBITDA margins come to around 17%. That's also including the noncore. So in quarter 3, you had indicated that there's a potential of about 300 basis point margin improvement. So are you still implying that for FY '27, we can move towards the 20% mark? And when it also comes to your revenue visibility that you have mentioned for FY '27, any further incremental orders are you expecting for FY '27? And how does your order book and bid pipeline is shaping post FY '27? If you could quantify that, please?

So I'll just take the margin question, and I'll let Dr. SRN answer the -- and the other leaders answer the, I would say, the order book and the pipeline. You see essentially, as what we stated, the noncore verticals, which are margin impactive or margin dilutive is already kind of, I would say, divested to Akkodis. So what remains are the core verticals where the average EBITDA is already at 20% plus. And that's where from -- then -- where we will start the incremental EBITDA climb. And that is something which we are wanting to do, at least about 150 to 200 bps kind of an improvement on a year-on-year basis.

Sure. And sir, the pipeline and other issues. Basically, we are trying to sort of -- let us divide this into 3 parts. As you know, that we have -- and space -- so we are building a strong pipeline in defense, mostly on the large -- very large programs, actually. We are focusing on large programs. Of course, there is a DRDO programs and this 21 design wins what we mentioned, that is coming up there that could result in certain forecast and so on. That is very good. That looks very good. And -- but we are -- what we are focusing on a very, very large programs like Swarm Drone programs and CLRTS, and these are all very large programs, HAL and so on. So we are focused on that. And I'm pleased to say that we are shortlisted for most of these programs among 3 or 4 or 5 maximum in the country. So we do have a very good chance of winning 1 or 2 of this will straightaway catapult us to a major league. So that is one thing on defense. On the ESAI, as I've been telling, our strategy is because we could not scale up much as an Indian company, so totally. So we are trying to position ourselves as a U.S. company, buying a Vietnamese U.S. company also that is here in the -- I'm not assured about it, but we are in the final stages of the talks. If it goes through, we'll have every 3 locations, U.S., Vietnam and India. And already, we have the largest consumer electronics company who is trying to engage with us in a big way. And one of the large hyperscalers, then we have the wireless giant Qualcomm, who is multiplying -- see, we started Qualcomm was last year about less than about $800,000 or something like that. This year alone, just in the 2, 3 months, we got a $3.5 million order from Qualcomm. There is a huge shift to India for manufacturing and this thing. So we are very hopeful. And Qualcomm, again, has given a pipeline, a large pipeline, very large pipeline with a monthly run rate of $500,000 to $1 million. So there is a very good momentum in every place in electronics side, but we need a nearshore operation, which will have to be in Silicon Valley, which we need some kind of a manufacturing ecosystem who are knowledgeable somewhere in Vietnam and India. So we are trying to create this at this point of time. I hope that this will scale up tremendously on the ESAI front. As far as aerospace is concerned, we are going to fully get into manufacturing. My colleague later on will explain. We are getting into acquiring a few companies, both -- the acquisitions will be focused only on aerospace and ESAI because defense, we are going to organically set things up. And ESAI, yes, one more aggression we are planning. In -- we have given an for the aerospace manufacturing. That also comes with a very good order book. Hopefully, we should be able to scale it up. So these are our -- this thing in the pipeline. I will not quantify that, but probably by Q1, once the Q1 results, once the restructuring process is in place, albeit we will be able to give you a picture of how much pipeline, what is happening, what is the total numbers we can discuss. But I'm saying with confidence that we have a very, very robust outlook for the coming years, including Power 930.

Our next question will be from the line of Mayur Parkeria.

Am I audible?

Yes, Mayur.

And clearly, we understand it's very easy to model numbers in excel and the reality is very different and 1 quarter or year that continues to happen. But we'd still like to congratulate the fact that we were able to cross through the bridge of restructuring. It's a very, very big milestone and great achievement on that. So whatever you guided over these quarters -- last 2, 3 quarters, I think the fact that it has got delivered itself is a very great news for -- from a long-term perspective. So I had 2 questions on this itself. One is -- just on this restructuring and the sale of the Engineering division, $30-odd million, and there is an optional payout at the end of '27. Is that the right understanding? Is it that we will carry on the business till June of '27 because the optional payout and it's based on the financials achievement over the next 1 year. So will the business get transferred to the buyer or we will run it just an understanding on that.

Shashi, you'll take this question?

Yes, let me answer this question. The way this deal is structured is that the business -- it is structured as a slump sale. So the businesses of heavy engineering, automotive and energy is going to be sold to the Akkodis entity in India. And the way the -- I would say, the -- and we will, of course, including the people, including the businesses, including the contracts as what is there in these 3 verticals. And in terms of the divestment prices what we talked about of the USD 30.6 million, there is, I would say, a guaranteed portion of $23.4 million, of which 75% will be paid immediately on closing and 25% will be paid after 1 year. And then again, in FY '27, based on the EBITDA targets as what we have fixed for ourselves, there is going to be an earn-out of another $7.4 million. So essentially, the entire spectrum of contracts, people and all of this will be transferred to the Akkodis entity. And we will handhold the Akkodis entity in terms of, I would say, growing the business and the synergies for a period of 1 year, after which we will cash out, taking the balance portion of 25% plus the earnout as what I just now told.

Okay. So we will continue to handle that entity up, but the ownership will get transferred.

It will be managed by Akkodis, but we will support Akkodis. Yes.

Right. And last question, actually, on this Power 30 (sic) Power 930, our long-term goal, while 20% kind of margins on the core segment is what you have been guiding and there are some -- I mean there is an indication already that we are very close to that. But the PAT number also you have mentioned is close to INR 900-odd crores for FY '30. Do you think that's underscoring the total potential and is that...

Yes, yes, yes, yes. This is a question. See, because it will be much more. See, we want to see these 2 parameters. Either one, we can achieve faster. For INR 960 crores from our PAT percentage, we require only INR 7,200 crores of revenue, okay, not INR 9,000 crores to achieve at a 25-plus percentage or that is EBITDA of 25% and PAT more than -- so it is not going to be much, but we are keeping both the targets of revenue and PAT as our goal because the year I took over, it was INR 960 crores. So we always thought that this year's PAT is -- this year's revenue is tomorrow's PAT. That's how the whole thing evolved. But currently, you are right, the percentage looks low, but it is not going to be this. Either we can do INR 9,000 crores with a higher PAT or we are going to do INR 960 crores with a lower revenue. That can be achieved even earlier than what it is instead of 2030. So we are confident about it. So it doesn't reflect the percentage.

Our next question will be from the line of Jatin Raghuvanshi.

So my first question is, sir, like we have close to INR 1,100 crores to INR 1,200 crores of CapEx plus we have 2 acquisitions in hand. Like if we see our cash flow, it's negative. Our short-term borrowing has also increased. If we take Akkodis proceeds, so it's around INR 300-odd crores, 20% to 25% of our CapEx. So how this FY '26 funded beyond this Akkodis cash? Like in past, we have talked about OEM partnership. But is there actually any -- we have signed any contract with those OEM partners? And you have also told in the past like there will be no equity dilution. Is this still the case or we have changed?

There are 2 parts to your question. So let me answer the first part. One is, as I said, this is -- this dilution is only Phase 1. So there is Phase 2. Yes. Phase 2 is coming very soon. We are confident that should be able to fund us totally, totally whatever we want to build, DAC, DAL, MAC, acquisitions, everything put together. So Phase 2 is going to be a much, much, much bigger thing. So we will be able to -- without any dilution, any borrowing, we should be able to do that. We hope that happens. I don't have -- I don't want to fix a time, but we are well on track for that. So there should not be any problem about our expansion plans, DAC, DAL, MAC and further expansion, acquisition of -- in fact, we are planning to acquire 4 companies once this is through, okay? The 2 in ESAI and 2 in aerospace side. So there should not be any problem and so on. Second question is OEM relationships. It is very -- going very, very strong. It is all going very good. But there is a change, the way government is this thing. From this year or last -- almost like last 12 months, offset is abolished. So people were -- there is a government kind of offset has slowed down or stopped. Now all the new contracts since 2025 is towards Make in India, Atmanirbhar and that kind of thing and a new approach is taken. So accordingly, we are talking to OEM to change our proposals and so on. Everything is subject to the government of India approval. There also, we have a good traction. But OEM relationship, OEM contracts, OEM JVs will take, I think, roughly around Q3 for it to complete. We are talking again to 2 major OEMs that will also get completed. So there is no issue. We are on track. In fact, I was yesterday in France, especially to discuss and handshake about this. And we are confident we are on track. There is no this thing, but I cannot because it involves 3 parties. One is a major OEM, another is the Government of India and then us. So we need to sort of cross all these things. So we are on track for that.

And if I can just confirm the other point that you mentioned about equity dilution. As we said before, we don't have any plans for equity dilution. And we also will not -- we will not be taking on any incremental long-term debt, if at all, it's going to be working capital debt and short-term bridge financing.

Our next question will be from the line of Suman Gupta.

Sir, first of all, thank you for the clarification that you provided in the beginning of the call. My question is regarding to the new strategies that we are entering into like the space, the hyperscalers. I just wanted to understand these in detail like what would be the end product? What would be the TAM for these products? And by when we can start generating revenue from these?

Thank you. There are 2 aspects you are talking about. One is the space and Xida. Xida is the ESAI. The old ESAI is now Xida. Xida is, as I said, it is the ESAI and we had a small AI team, 30-member team, which was catering to internal this thing and so on. Put together, right now, our ESAI did a revenue of about $15 million roughly. So we are putting everything into this new vehicle. Why? Because the action is happening in U.S. It is in the forefront of the whole technology change because by the time it comes to India, there are a lot of shifts. And so we want to be a totally independent company. Same customers, what we are trying to do is already you know that we have 4 major customers, 2 semiconductor customers, TI and Qualcomm. There are 2 major customers, one hyperscaler and one largest tech company in the world. So these 4, apart from that, there we have Axxon, Aptiv, so many other customers. So we have 10, 5 -- 4 very big, 6 medium-sized companies. Right now, we are in the process of acquiring 2 more companies. One company has got 4 fantastic customers, one, the largest semiconductor equipment manufacturing company in the world. And again, one more extra hyperscaler we never had before and 2 other companies, very big and some few Japanese companies. This is company based out of Vietnam. As we speak, I'm here to sort of close on that. We don't know, but I hope everything goes well, we'll be signing this company, revenue is less, but the customers are very, very good. Today, customers have stopped enrolling new vendors. So we are acquiring those customers going by this and also some infrastructure. So we are confident we are going to scale up. This will be involved in data centers, some kind of micro data centers, data centers and test equipment. What we do for hyperscalers and the consumable giant -- consumer giant is were there -- not exactly , we can say that it's because it's like not a long-term like defense . Example, you make a phone, it has have to be required. And every year, it has to change. So it is a recurring order, recurring process, we'll be able to do that. So we are engaged with that. We feel there is a 10x revenue possibility from here, and we are working towards it. It's all possibility. We are working towards it. And what I can say is that by FY '27, we'll have 3 to 4 more big customers in the world. and probably a path to scaling up our ESAI relationship. Regarding space, the sweet spot are 2 things currently. Actually, I can say that to my knowledge, it is about 3, okay? So it's, again, another triangle of space, which is spacebus, of course, then space payloads and then SAR, which is synthetic aperture radar, which is almost part of this. So we are trying to focus on this. You know Arun Arumugam has been hired last year. He's a space expert, doctorate in space, U.K.-based. And he's the guy who is driving the space initiative for us with his contacts and with this reputation. So we are talking to a few customers to get into collaboration and manufacturing of these things. As you know, that India has got 50 or 60 active satellites, which is Elon Musk is just sending out to sky in this more than 150 per year, 3x what India has, okay? That means enormous amount of need is required for the space bus. Every country needs it. So we feel there is a huge demand. It's the right time to come. And again, we are thinking globally. Globally, not only for Indian market, we are thinking globally. And whatever we do in space, ESA and all are very, very global, very, very large scale, very, very global. So we need a collaboration. We need knowledge. So we are trying to partner with the best in the world. We'll try to do that. Again, I'll elaborate this once there is a traction because it is still speculative. We are trying to do our best. But I hope that I will talk to you by June, July. Any one of you, please do come and visit us any time in the last week of June or first week of July, I'll be able to elaborate in person what we are trying to do, along with the type of collaboration we are doing, open house, visit the facility, et cetera. But meanwhile, I hope I'll be able to get much more clarity in the next 30, 45 days on both space and ESAI, okay? Thank you. So regarding the manufacturing, aerospace manufacturing, of course, we are trying to do the acquisitions. So let us say, okay? Take care. Hope it answers your question.

Our next question will be from the line of Disha.

Am I audible, sir?

Yes. Please go ahead.

Sir, my first question is on your overall growth. So this year, I think you've given the guidance for INR 1,377 crores, so approximately INR 1,400 crores. So for us to reach this INR 9,000 crore target by FY '30, that would imply that we have to grow at a CAGR of about 90% from FY '28 till FY '30. So this growth of 90%, will we start seeing from FY '28 itself? Or will it be in the later part? How should we look at that? And my second question, sir, is on overall margins. So in our core segment, today itself we're sitting at 21%. So you mentioned 150 to 200 bps improvement. So that would mean 23% sort of EBITDA for this year. And this continuous improvement would mean 30% EBITDA till FY '30. So that would imply that our PAT could be much more higher than what we're guiding. So how should one look at that, sir?

Disha, thank you. I just want to -- your question is in 2, 3 parts. One is, of course, we are not going to see continuous improvement in EBITDA. At some point, it has to stop. As you know, this year, we had 26% on ESAI, about 22%, 23% in defense, 22.6%, and 17.2% in aerospace. So that is so -- but if you look at it, if I improvise aerospace by getting into aerospace manufacturing, I'm hoping to achieve somewhere around average of 23% and possibly improve until it saturates. At some point of time, it will stop. I'm not saying it will be continuously improving. It's going to stop. I think somewhere around 25%, 27%, it may stop or we will be happy to do that. Second is PAT, we have answered this question. INR 9,000 crores, and it's not a proportional PAT. We may reach INR 960 crore PAT much before INR 9,000 crore revenue. For achieving in this rate, we require only about INR 7,200 crores of revenue, which we feel very much achievable. We can achieve it even slightly earlier than 2030. The third portion is, yes, you are right, INR 1,377 crores, but you should understand the composition of our revenue. Today, we are only doing design and design-based services and small kind of production, prototyping production. We never do any serial production, except for one component which we are trying to do. We never did a continuous production. Now we are trying to do a major, major production. When you do that, when you start, a simple logic, Disha, it is like an architect charges 3% of the fee of a building. A builder charges remaining 97%. If I'm a good architect, I'm moving as a builder, I get 97% of the value, not the 3%. So I'm just looking at moving from being an architect to a builder, okay? So this is what I'm told. So automatically, this scales up my revenue and quality of revenue, everything. So I hope I'll be able to transition that. What is important here is massive facilities are required, world-class certification, everything and customers, customers -- acquiring customers. So that's what we are doing through acquisitions. Acquisitions help us by time, actually 2 to 3 years of time that helps us acquiring certificates, acquire customer contacts, acquire the ability to manufacture, manufacturing skills fill the gaps. That's what we are trying to do. We are confident we have that methodology. We have a super team to back us up. As you know that we have piled up a very, very good team, execution team. Hopefully, we should be able to achieve these things. As I said, I'm very, very confident, and there is no this thing in my mind. But as we said, I will be able to give much more details in other -- because we are still amidst the restructuring process, probably by June end -- sorry, July end, which when I talk to you on Q1 results, I'll be much more clearer with more numbers and clarity, okay? Even give you some kind of this thing, pipeline items and what we do, et cetera, okay.

Our next question will be from the line of Gaurav Shukla.

Am I audible, sir?

Yes. Please go ahead.

Sir, in last con call, you have discussed about ESOP of INR 5 crores in that year. And that time, you have told that in next quarter, we will tell about FY '27. Any plan of ESOP?

Can you repeat the question, sir? I just missed it out. Sorry. My line is...

In last con call, you have told about INR 5 crores ESOP. And..

Yes, yes. Thank you. See, ESOP for all the people, 38 lakh shares are kept -- 3.8 million shares are kept for ESOPs. And we have given a very, very limited ESOP right now. And this INR 5 crores is very small. It is only for about 10% of the total ESOP this thing because the ESOP will cost roughly around INR 54 crores for us. So we are trying to bring this as part of this transaction income in the month of -- because as Shashi mentioned, it is INR 175 crores are going to come as income to us, extraordinary income. So we will try to sort of align this with ESOP. Hopefully, by September 30, by Q2, we should be able to pay for the ESOPs and kind of new provision for ESOP and start issuing to everybody, okay? And also one more reason, sir, by this restructuring, we have now 2,800 people. Now it will be reduced to roughly around 1,200 people. 1,500 people will go in the restructuring. So in the result of it, we will have limited people to take care of and new people are also coming. So we want to recalibrate the ESOP options and do that properly. So by answering this, we'll have both money and the right type of configuration people, et cetera, by Q1, Q2, we should be able to award the entire 3.5 million ESOPs.

Our next question will be from the line of Balasubramanian.

Sir, with that divestment money of INR 293 crores pretax, I'm trying to understand what is our CapEx program and capital allocation? Because if you could describe CapEx program, all 3 facilities after these divestments and capital allocation in terms of our own company and targeted acquisitions. I think we have planned 2 acquisitions initially.

Yes, sir. So I'll just tell you, let us not talk only the Phase 1. I'll just recap what we have been trying to invest. It's massive. So DAC is about INR 1,200 crores. MAC, the Hyderabad facility, is about INR 300 crores. DAL, we have already spent INR 120 crores -- roughly around INR 100 crores already spent and internal accruals, et cetera. And up to this point, it's fine. INR 100 crores, INR 150 crores has already been spent. So we are talking about 3 facilities, organic, everything put together is about roughly around INR 1,600 crores -- INR 1,550 crores, INR 1,600 crores. Acquisitions, one ESAI acquisition will cost very less or roughly around INR 50 crores. And 2 aerospace acquisition will cost about roughly around INR 400 crores, INR 450 crores. One more ESAI acquisition will be INR 150 crores. So we are looking at INR 600 crores of acquisitions, 2 ESAIs and 2 aerospace. Put together, it will be somewhere between INR 2,100 crores to INR 2,250 crores totally. And as we said, Phase 1 and Phase 2 put together should be able to -- post tax, should be able to cater a majority of this, majority of this, look almost 80% of it. So whatever pending, it should be met with internal accruals or some kind of partnerships or JVs or something like that. But we don't see any need. It will be totally self-funded, totally taken care of and should not be any problem. You can think it's the beginning. Whatever you saw, INR 293 crores and all are a very, very modest beginning of our entire big restructuring plan. So if you look at this context, I'm not able to reveal it more than this because we are under obligations and NDA. So as I said, we are on track. We will be able to fund the entire -- these -- both CapEx and acquisitions and through our -- this kind of means, sir. Thank you.

Thank you. That concludes our Q&A session. As soon as this call finishes, all participants will be directed to a survey for your feedback. I request you all to please take a few moments to fill this in. This helps us a lot with making sure our disclosures are up to standard and meeting your expectations. We'll now hand over to Mr. Mukund for closing remarks. Over to you, Mukund.

Thanks, Shankhini. Thank you, everyone, for being on the call today for asking the questions and for engaging with us through the entire year. This has been a very important year of change of strategic execution. We grew our revenue and EBITDA. We have strengthened the core domain mix, and we have taken decisive steps to sharpen our portfolio. Q4 was affected by material timing shifts, and we have quantified the impact quite transparently, and I hope you've got that full picture clearly in this call. Our focus for next year is disciplined execution is around converting our backlog, improving cash and working capital discipline and bringing capacity online. We will continue to build AXISCADES as a high-value aerospace, defense, space and deep tech AI platform in line with the announcements and announcements yet to come over the year. We will, of course, keep you updated through consistent and compliant disclosures. We also will look to have you -- have an open day maybe at our new facilities for you to get a real feel of what we are putting together and at the same time, probably conduct a management discussion. You can await probably further developments on this towards the end of this quarter or early next quarter. Thank you very much. Thanks.

Adding that, Mukund, I sincerely request every participant here to visit us. Seeing is believing, please come over. We will allocate slots from last week of June, first week of July. We'll create some kind of an open house. We'll coordinate through Dickenson and Shankhini and so please register if you want to visit. We will be -- I'll be personally available. My team will be available to explain to you, or walk you through everything. We'll be very, very glad to receive and give a much more, so our main aim is to ensure that you don't have any ambiguity on our path, our everything, what we are trying to do because we need to do a lot of times by hearing some -- this is just looking at excel sheets or looking at some PPTs may not give any justification. So you have to see the groundwork what we are trying to do. And in person, we'll be able to talk much more freely. Please do come. That is my open invitation to you. We'll try to set up 2 weeks slot, please do come. Thank you.

Thank you, Dr. SRN and to the entire AXISCADES team and to all our participants today. For all your follow-up questions, please do write to us at [email protected]. This e-mail ID is on the last slide of our investor deck, and we'll make sure all your questions are answered to your expectations. On that note, thank you for joining us today, and please have a good evening. You may now disconnect your lines. Thank you.

Thank you, Shankhini.

Thank you, everyone.