KRISHNA DEFENCE Q2 CONCALL: REITERATES 30% REVENUE GROWTH OUTLOOK, AIMS TO SUSTAIN 25–26% EBITDA MARGINS; ₹109 CR ORDER BOOK, ₹305 CR TENDER PIPELINE & ₹400–450 CR REVENUE CAPACITY WITH LIMITED INCREMENTAL CAPEX

• Revenue Growth Guidance: Management reiterated its expectation of approximately 30% annual revenue growth, supported by defence orders, faster execution, commercial shipbuilding and an expanding product portfolio. • Medium-Term Growth Outlook: Management discussed maintaining around 30% growth over the next 3–5 years, subject to continued order inflows and execution. • EBITDA Margin Outlook: Management aims to sustain EBITDA margins around 25–26%, supported by a favorable product mix and manufacturing efficiencies. • Margin Sustainability: Management expects margins to remain near current levels if the contribution from specialized welding consumables, naval products and Army-related components remains healthy. • Margin Guidance Qualification: Management clarified that sustaining current margins is an aspiration rather than a firm commitment, as profitability depends on the quarterly product mix. • Order Book: Outstanding purchase orders stood at approximately ₹109 Cr. • Tender Pipeline: Company has already submitted bids for defence and allied orders worth approximately ₹305 Cr. • Tender Win Rate: Management indicated that its historical tender success rate is approximately 50%. • Tender Conversion Timeline: Management expects decisions on its existing tender pipeline over approximately 3–6 months, subject to successful bidding and customer approvals. • Q3 FY27 Order Execution: Management expects most of the existing ₹109 Cr order book to be executed during Q3, with some deliveries potentially extending into Q4. • H2 FY27 Revenue Outlook: Management expects faster order execution during H2 as customers increasingly place smaller, shorter-duration purchase orders. • Order Book Strategy: Management explained that customers are shifting from large orders with 12–18-month delivery periods toward smaller orders placed against immediate requirements. • Order Execution Efficiency: Increased manufacturing capacity has reduced delivery timelines, allowing the company to execute orders faster. • Revenue Capacity: Management indicated that existing infrastructure can support approximately ₹400–450 Cr of annual revenue with limited incremental investment. • Future Capex Guidance: Management does not foresee the need for a major new plant for its existing product portfolio in the near term. • Incremental Capex Strategy: Company will continue investing in process improvements, automation, specialized machinery and manufacturing efficiency. • Bulb Bar Capacity: Existing production capability stands at approximately 4,000–4,500 tonnes annually. • Welding Consumables Capacity: Management indicated approximately 500 tonnes of annual capacity across specialized grades, subject to product specifications. • Bulb Bar Expansion Timeline: Management may evaluate a larger dedicated bulb bar expansion after approximately two years. • Additional Land Acquisition: Company has acquired approximately 50,000 sq. ft. of additional land for future manufacturing expansion. • Manufacturing Strategy: Management intends to prioritize critical processes internally while outsourcing selected non-critical operations such as cutting, painting and shot blasting. • Asset Turnover Strategy: Management expects its selective outsourcing model and specialized equipment to support capital-efficient growth. • Defence Revenue Contribution: Defence products account for approximately 92–93% of total revenue. • Dairy Business Contribution: Dairy-related products contribute approximately 7–8% of revenue. • Bulb Bar Revenue Contribution: Bulb bars account for approximately 55–60% of revenue, according to management's broad product-wise estimates. • Armoured Steel Contribution: Armoured steel products supplied for Army applications account for approximately 15–20% of revenue. • Welding Consumables Contribution: Specialized welding consumables account for approximately 15–20% of revenue. • Higher-Margin Products: Management identified specialized welding wires and certain Army products as important contributors to the Q2 margin improvement. • Naval Shipbuilding Opportunity: Management expects future naval platform construction, destroyers, corvettes and submarines to generate demand for specialized steel profiles and related components. • Naval Order Timing: Management clarified that orders are received from shipyards after major vessel contracts are awarded and detailed designs are finalized. • Next Generation Corvette Opportunity: Management expects opportunities from upcoming corvette programmes but did not quantify potential order value or delivery timelines. • Destroyer Programme Opportunity: Company expects to participate in future destroyer construction programmes through supply of specialized steel profiles and other approved components. • Submarine Programme Opportunity: Management sees potential business from upcoming submarine construction projects, including P-75(I), subject to shipyard procurement schedules. • Naval Bulb Bar Requirement: Management indicated that bulb bars and related steel profiles typically account for approximately 10–15% of a vessel's weight, depending on its design. • Naval Market Share Aspiration: Management expressed hope of obtaining at least approximately 50% share in certain future naval bulb bar requirements, although actual allocations remain uncertain. • Approved Defence Suppliers: Management indicated that only two suppliers are approved for the relevant naval bulb bar products. • Commercial Shipbuilding Outlook: Company has already commenced supplying specialized steel products for commercial vessels. • Commercial Shipbuilding Orders: Initial commercial shipbuilding orders are relatively small, but management expects inquiries and order opportunities to expand. • Commercial Shipbuilding Margins: Management indicated that margins on bulb bars supplied for commercial vessels are broadly comparable to naval applications. • Commercial Shipbuilding Market Position: Management highlighted its approvals from ABS and other classification societies for supplying steel profiles to commercial shipbuilders. • Commercial Import Competition: Management stated that imports of relevant bulb bars are restricted for domestic shipbuilding, with exceptions possible for export-oriented vessel construction under applicable advance licensing arrangements. • Naval & Commercial Diversification: Management expects a broader customer base across defence and commercial shipbuilding to reduce dependence on individual procurement programmes. • Shipyard Customer Base: Management indicated that the company works with approximately five defence public-sector shipyards and one private shipyard. • VABO Joint Venture: Manufacturing infrastructure for the VABO partnership has been established, with required investment of approximately ₹5–6 Cr. • VABO Commercialization Timeline: Management expects the joint venture to potentially commence revenue generation during Q4 FY27, subject to completion of remaining approvals and agreements. • VABO Product Opportunity: The partnership focuses on specialized composite doors and hatches for naval applications. • Composite Doors & Hatches: Management expects lightweight composite systems to offer opportunities for both new naval vessels and retrofit projects. • VABO Regulatory Progress: Management indicated that approvals are at the final stage, with formal signing and completion processes remaining. • Naval Retrofit Opportunity: Management expects the Navy's potential transition from conventional steel doors and hatches toward composite alternatives to create a long-term retrofit opportunity. • Belgian Technology Partnership: Company has signed an MoU with a Belgian partner to manufacture specialized products in India for export to European customers. • Belgian Partnership Manufacturing: Initial manufacturing will be undertaken at Krishna Defence's Indian facilities, with exports forming the first phase. • Belgian Partnership Domestic Expansion: Management may subsequently explore supplying the same products within India. • Export Business Outlook: Management expects export activity from the Belgian partnership and VABO products, although current volumes remain too small to quantify future revenue contribution. • Export Margin Outlook: Management expects export margins to be broadly similar to domestic sales, with the possibility of modestly better realizations. • Underwater Technology Expansion: Company is developing autonomous underwater platforms and related systems to enter the underwater domain awareness market. • Underwater Prototype: Management confirmed that an underwater platform prototype is under construction. • NIO Goa Technology Transfer: Company acquired technology from CSIR–National Institute of Oceanography, Goa, to support underwater platform development. • Technology Transfer Benefits: Management expects the acquired technology to shorten product development cycles and support the design of different-sized underwater platforms. • X-Sub Robotics Joint Venture: Company has incorporated a joint venture focused on autonomous underwater vehicles and is building its technical team. • Underwater Business Timeline: Management does not expect material commercial contribution from the developmental underwater projects for at least approximately 12–18 months. • Underwater Long-Term Opportunity: Management identified underwater and maritime domain awareness as important future growth areas. • Smart Ammunition Development: Company is working with partners on smart ammunition-related technology, including applications for naval guns. • Smart Ammunition Revenue Outlook: Management expects the business to require further development before meaningful commercial revenue can begin. • Smart Ammunition Export Opportunity: Management indicated that its smart naval ammunition project could eventually address export markets, including customers using NATO-standard ammunition. • Ammunition Components MoU: Company signed an MoU with a major defence manufacturer for specialized steel components used in ammunition and related applications. • Ammunition Components Manufacturing: The project involves high-precision machining and specialized hardened-steel materials. • Ammunition Components Market: Management indicated that the current components project is focused on the domestic market, with commercial details restricted by confidentiality agreements. • Defence Technology Strategy: Management intends to expand its product portfolio through indigenization, imported-product substitution, technology transfers and partnerships with global manufacturers. • New Business Opportunities: Management identified specialized welding consumables and additional imported-steel substitution products as relatively near-term opportunities using existing infrastructure. • Long-Term Product Development: Management considers underwater systems and smart ammunition larger potential markets, although these businesses remain in developmental stages. • WaveOptix Business Outlook: Management expects the associate company to grow approximately 20% or more annually, supported by defence-related orders. • WaveOptix Revenue Treatment: Management clarified that WaveOptix is an associate company and does not contribute directly to consolidated operating revenue. • WaveOptix Technology Focus: The company is working on radio-frequency-to-optical-fiber and optical-fiber-to-radio-frequency conversion modules. • WaveOptix Quantum Technology: Management clarified that WaveOptix is not currently developing quantum key distribution technology. • Conceptia & WaveOptix Accounting: Management indicated that both entities are associates, with their financial contributions reflected through the relevant profit-and-loss accounting rather than direct revenue consolidation. • Specialized Welding Wire Opportunity: Company is an approved supplier of specially developed alloy welding consumables for naval applications. • Welding Consumables Deliveries: Management confirmed that specialized welding wires are already being supplied and contribute to existing revenue. • Welding Wire Export Restrictions: Management indicated that certain DRDO-developed welding grades cannot currently be exported. • PLI Incentive Outlook: Company has received approval under the relevant PLI programme and expects incentive benefits from FY28 onward. • PLI Benefits: Management indicated that incentives will depend on qualifying capacity expansion and incremental production volumes. • Customer Advances: Management is negotiating advance payments from commercial shipyards to improve working capital efficiency. • Advance Payment Range: Certain customers have agreed to advances of approximately 5–15%, although this is not yet standard across contracts. • Receivables Position: Trade receivables increased from approximately ₹35 Cr to ₹89 Cr during H1 FY27. • Receivables Increase Explanation: Management attributed the increase mainly to a concentration of deliveries during late August and September. • Customer Payment Cycle: Typical customer payments are received approximately 45–60 days after dispatch. • Receivables Normalization: Management expects receivables to moderate as outstanding payments are collected, while noting that the quarter-end increase largely reflects billing timing. • Defence Payment Track Record: Management stated that it has not experienced significant prolonged payment issues with major Navy and armed forces customers over its operating history. • Product Quality: Management highlighted its multi-stage inspection process and indicated that dispatched products have maintained a strong acceptance record. • Other Expenses: Management attributed the increase in other expenses to higher production activity and product development-related operating costs. • Liquidated Damages: Management clarified that the increase in other expenses was not driven by provisions for late-delivery penalties. • Q2 Revenue Performance: Standalone revenue increased approximately 55.7% YoY to ₹75.3 Cr. • Q2 EBITDA Performance: Management-reported EBITDA increased approximately 119.9% YoY to ₹20.3 Cr. • Q2 EBITDA Margin: Margin expanded to approximately 26.9%, an improvement of 786 bps YoY. • Q2 Net Profit: PAT increased approximately 120% YoY to ₹15.1 Cr. • Q2 Net Profit Margin: Margin improved to approximately 20.1%, an expansion of 590 bps YoY. • Manufacturing Assets: Management indicated property, plant and equipment of approximately ₹38 Cr as of September 2026. • Key Challenges: Timing of defence procurement approvals, conversion of the ₹305 Cr tender pipeline, quarterly product-mix volatility, working capital requirements, delayed commercialization of new technology ventures and dependence on shipyard order schedules remain important factors.

KRISHNA DEF AND ALD IND L

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