India's defence ATE specialist with AS9100D certification — EBITDA margins doubled to 18.6% in FY25

Digilogic Systems Limited is a Hyderabad-based defence & aerospace ATE specialist with 18+ years of track record serving DRDO, ISRO, HAL, and BEL. Founded by an ex-IAF officer, the company designs and deploys end-to-end test systems for India's most critical programmes — Chandrayaan-3, Aditya-L1, LRSAM, MRSAM. FY25 breakout: revenue +40% to ₹72.06 Cr, EBITDA margin doubled to 18.60%, PAT tripled to ₹8.11 Cr with ROE 34.57%. IPO raised ₹69.68 Cr (Jan 2026) for Project Udaan — ₹63.70 Cr new facility with environmental testing, BTP/BTS manufacturing, rapid prototyping (commercial production Dec 2027). Strengths: AS9100D, NI Silver Alliance Partner (RF), DcPP empanelment, 98% repeat customers. Risks: 99% defence concentration, family governance, extreme H1/H2 lumpiness, NI supplier dependency (37-47%).

Digilogic Systems Limited (CIN: U62099TG2011PLC077933) was founded in 2007 as a partnership firm by Madhusudhan Varma Jetty, a former Indian Air Force officer with 15 years of service specializing in Radar Fitting, bringing 38+ years of defence and space industry experience. The firm was converted to a Private Limited Company in 2011 and subsequently to a Public Limited Company in June 2025 ahead of its BSE SME IPO. Headquartered in DSL Abacus Tech Park, Uppal, Hyderabad, Digilogic operates in the Test, Measurement & Simulation (TMS) domain — designing, developing, and deploying Automated Test Equipment (ATE), test systems, and simulation platforms exclusively for India's defence and aerospace establishment. The company has built deep relationships with DRDO, ISRO, HAL, BEL, and other defence PSUs over 18+ years, achieving 98% repeat customer revenue. Key milestones include contributions to Chandrayaan-3 (lunar mission), Aditya-L1 (solar observatory), LRSAM and MRSAM missile systems, and wideband ground checkout systems. These engagements earned the company multiple DRDO and ISRO appreciation letters. The company holds AS9100D certification (aerospace quality management) from TÜV SÜD, NI Silver Alliance Partner status with RF Specialty designation, and DcPP empanelment. The transformative growth inflection came in FY25 — revenue jumped 40% to ₹72.06 Cr while EBITDA margins nearly doubled from ~10% to 18.6%, driven by higher-value Test Systems revenue mix. The company raised ₹69.68 Cr via fresh issue in its January 2026 IPO, primarily to fund Project Udaan — a ₹63.70 Cr new facility at TGIIC Hardware Park Phase II, Hyderabad, equipped with environmental testing chambers, BTP/BTS manufacturing capabilities, and a rapid prototyping lab. Commercial production is targeted for December 2027.

India's TMS market: ₹4,799 Cr (FY25) → ₹9,174 Cr (FY30F) at 13.8% CAGR. Global TMS market: ₹1,24,971 Cr. ATE segment CAGR: 13.0%. Defence & Aerospace: 39% of India's TMS demand. India's defence budget: ₹6.8L Cr (FY26) with capital acquisition growing 10%+ CAGR. Key policy drivers: DAP 2020, Positive Indigenisation Lists, DcPP empanelment, Aatmanirbhar Bharat. Defence exports grew 30x in a decade (₹686 Cr FY14 → ₹21,083 Cr FY24).

Competes with Data Patterns (mainboard, ₹2,000+ Cr mcap — broader defence electronics), Centum Electronics (EMS/subsystems), and unlisted ATE firms. Digilogic's edge: 18+ years defence ATE track record, NI Silver Alliance Partner (RF Specialty), DcPP empanelment, AS9100D (TÜV SÜD), reusable IP library, end-to-end capability (design → lifecycle support). 98% repeat customer revenue = extreme stickiness. Barriers: domain expertise, security clearances, OEM partnerships, trust-intensive procurement.

Authorized: 5 Cr shares of ₹2 FV (₹10 Cr). Pre-offer: 2,22,52,630 shares. Securities Premium: ₹1,141.15L pre-IPO. Post-IPO Net Worth: ₹33.46 Cr (FY25). D/E improved from 0.98 (FY23) to 0.40 (FY25). Total Assets: ₹72.57 Cr (FY25). Market Maker: Pace Stock Broking (3,90,000 shares). BRLM: Indorient Financial Services.

Primary facility: DSL Abacus Tech Park, Uppal, Hyderabad. Marketing office in Bangalore. 102 employees (70 in Operations & Production). Attrition 2.63% (H1 FY26). End-to-end TMS model: requirement analysis → design → hardware development (BTP/BTS) → software (LabVIEW) → integration → factory acceptance → installation → lifecycle support. Key tech partnerships: NI (Silver Alliance, RF Specialty), Tektronix, Keysight. Project Udaan (under construction): TGIIC Hardware Park Phase II, 8,336 sq.mt land, ~6,050 sq.mt built-up. Environmental testing (altitude/thermal chambers, vibration), BTP/BTS manufacturing (pick & place, reflow, X-ray, PCB assembly), rapid prototyping lab. 53 equipment items at ₹22.69 Cr. Total ₹63.70 Cr. Commercial production Dec 2027.

No formal consolidated order book disclosed in RHP. Revenue visibility from 98% repeat customer revenue, embedded DRDO/ISRO/HAL/BEL relationships, and long lifecycle support contracts. Recent: DRDO order ₹7.15 Cr (Mar 2026). Defence procurement back-loads to H2 — H1 FY26 revenue ₹18.18 Cr vs FY25 ₹72.06 Cr. SOM: ₹72 Cr (FY25) → ₹250 Cr (FY30) — 3.5x expansion runway.

FY25 breakout: revenue +40% to ₹72.06 Cr, EBITDA margin nearly doubled to 18.60% on richer Test Systems mix. PAT tripled to ₹8.11 Cr. ROE 34.57%, ROCE 34.27% — exceptional. D/E improved to 0.40. H1 FY26 revenue ₹18.18 Cr (25% of FY25) reflects extreme defence seasonality — H2 expected significantly heavier. Net working capital days: 26 (FY23) → 113 (FY25) → 212 (H1 FY26) — structural government billing cycle feature, not profitability concern, but cash flow watchpoint.

BSE SME — lighter governance per SEBI LODR Reg 15(2). Board: MD, 2 WTDs, 3 Independent Directors with genuine defence pedigree (DRDL 35 yrs, ISRO/DRDO 40 yrs, banking). CFO: CA, XLRI. Auditor: B. Srinivasa Rao & Co — clean opinions. ROC SCN for private placement lapses — penalties set aside on appeal (May 2026). No active regulatory adverse findings. MD OFS of 10,89,600 shares. Positive signals: domain-expert independents, AS9100D quality systems, 2.63% attrition.