India's defence ATE specialist with AS9100D certification — EBITDA margins doubled to 18.6% in FY25
₹72 Cr revenue, 99% defence revenue, 98% repeat customers, and a ₹63.7 Cr new facility (Project Udaan) coming online by Dec 2027. Niche defence play or too concentrated?
The business
Digilogic designs, develops, and deploys Automated Test Equipment (ATE), test systems, and simulation platforms for India's defence and aerospace sector. An NI Silver Alliance Partner (RF Specialty) and DcPP empanelled company serving DRDO, ISRO, HAL, and BEL with end-to-end TMS solutions. Contributed to Chandrayaan-3, Aditya-L1, LRSAM & MRSAM missile programs.
Why this business matters
India's defence budget at ₹6.8 Lakh Cr (FY26) — capital acquisition allocation growing at 10%+ CAGR. Every new missile, radar, satellite, and aircraft system requires ATE for testing and validation
Aatmanirbhar Bharat & DcPP empanelment — government mandating indigenous procurement under DAP 2020. Digilogic's DcPP status and AS9100D certification position it as a preferred vendor for Make in India defence testing
India TMS market ₹4,799 Cr growing at 13.8% CAGR to ₹9,174 Cr by FY30 — ATE segment at 13.0% CAGR. Defence & Aerospace accounts for 39% of TMS demand. Massive runway for specialized providers
The moat
Reality check
99% defence revenue concentration — virtually zero diversification. Government procurement cycles, budget delays, and policy changes can cause severe quarterly lumpiness
Family-run promoter structure — MD, wife, and both sons hold key positions. All 4 family members draw remuneration. No formally communicated succession plan
Supplier concentration risk — NI Systems accounts for 37-47% of purchases. Loss of NI Alliance Partner status or supply disruption would severely impact operations
Working capital spike — Net working capital days ballooned from 26 (FY23) to 212 (H1 FY26). Government contract payment cycles create persistent receivables pressure
Exit Trigger
Exit if EBITDA margins fall below 14% for 2 consecutive quarters, if NI Alliance Partner status is lost, if Project Udaan capex overruns exceed 20% of budget, or if net working capital days exceed 250 without corresponding order book growth
The verdict
Pure-play defence ATE specialist with 18+ years of pedigree, serving India's most critical programs (Chandrayaan, LRSAM, MRSAM). The EBITDA margin doubling to 18.6% and ₹63.7 Cr facility expansion signal a step-change. However, 99% defence concentration, family governance, and extreme H1/H2 lumpiness make this a high-conviction, patience-required story.
Watch For
H2 FY26 revenue catch-up (must significantly exceed H1's ₹18.2 Cr), Project Udaan construction milestones (building completion by May 2027), new order wins in unmanned systems/AI-enabled testing, and export revenue progress towards 10% target within 3 years.
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Read Full Deep DiveA defence ATE specialist behind Chandrayaan-3 and MRSAM — with EBITDA margins doubling and a ₹63.7 Cr new facility. Pure-play conviction bet or too defence-dependent? Tell us below 👇
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Disclaimer: For educational purposes only. Not SEBI-registered. Author may hold positions in stocks discussed. Not a buy/sell/hold recommendation. Do your own due diligence.
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