AXISCADES borrowings hit ₹624.4 crore as Phase 2 slips

AXISCADES Technologies Limited reported total borrowings of ₹624.4 crore at 30 September 2026, up from ₹276.4 crore at 31 March, as ₹310 crore of net H1 FY27 borrowing funded Cloud Wave and capital expenditure; Phase 2 divestment proceeds are now expected in February 2027.

Why did AXISCADES borrowings increase in H1 FY27?

AXISCADES’ borrowings rose by ₹348 crore during the six months ended 30 September 2026, with non-current borrowings increasing to ₹255.8 crore from ₹75.2 crore and current borrowings rising to ₹368.6 crore from ₹201.2 crore. Total assets increased 42% over the same period, reaching ₹2,079.7 crore from ₹1,466.2 crore.

AXISCADES said ₹310 crore of net borrowing in H1 FY27 funded the Cloud Wave acquisition and capital expenditure. It invested ₹129.8 crore in Cloud Wave, net of cash acquired, during the half year and consolidated the acquired 90% stake from Q2 FY27.

Working capital also used cash in the period. Operating cash flow was negative ₹57.7 crore in H1 FY27, compared with positive ₹13.6 crore in H1 FY26, after a working-capital absorption of ₹86.5 crore. Inventories increased to ₹112.3 crore from ₹79 crore, while trade payables rose to ₹213.6 crore from ₹143.4 crore.

What did AXISCADES acquire with the additional funding?

AXISCADES used part of its H1 FY27 funding for Cloud Wave, which contributed ₹16.5 crore of revenue in Q2 FY27, its first quarter of consolidation. Cloud Wave recorded a 42% gross margin and a 20.3% earnings before interest, tax, depreciation and amortisation (EBITDA) margin, generating ₹3.4 crore of EBITDA.

Aerospace revenue was ₹23.1 crore in H1 FY27, comprising Cloud Wave’s ₹16.5 crore Q2 contribution and ₹6.6 crore of organic revenue. AXISCADES said that, on an unaudited pro forma basis including Cloud Wave for the full half year, aerospace revenue would have been ₹81.9 crore and EBITDA ₹17.8 crore, or a 21.7% margin.

The balance sheet reflected the enlarged aerospace platform at 30 September 2026. Property, plant and equipment increased to ₹174.1 crore from ₹91.5 crore, goodwill rose to ₹211.3 crore from ₹150.5 crore, and other intangible assets increased to ₹130.9 crore from ₹48.3 crore. Other non-current liabilities included a ₹31.6 crore Cloud Wave non-controlling-interest put liability.

When will AXISCADES receive Phase 2 divestment proceeds?

AXISCADES expects Phase 2 of its strategic divestment to close in February 2027, rather than by the previously indicated end of November 2026. The company said NewCo incorporation and customer novations are in process, and that interim funding will be arranged if required.

Phase 1 closed on 30 September 2026, and AXISCADES said first-tranche consideration was received in October and November 2026. The company recognised a ₹140.84 crore disposal gain in Q2 FY27, including ₹20.94 crore of foreign currency translation reserve recycled on disposal; net discontinued exceptional gain was ₹129.30 crore after transaction costs and the Epcogen goodwill write-off.

AXISCADES said Phase 1 proceeds and debt capacity give it the means to reduce debt and fund the transition without equity dilution. However, the presentation did not state the amount of first-tranche cash received or set a quantified debt-repayment target.

How is the delayed divestment affecting AXISCADES’ earnings transition?

AXISCADES reported H1 FY27 finance costs of ₹21.9 crore, up 57.9% from ₹13.9 crore in H1 FY26. Q2 FY27 finance costs were ₹12.18 crore, compared with ₹9.72 crore in Q1 FY27 and ₹6.55 crore in Q2 FY26, alongside the higher borrowing balance.

Reported EBITDA fell 51.5% year on year to ₹39.3 crore in H1 FY27 even as revenue rose 30% to ₹705.7 crore. EBITDA before the ₹12 crore employee stock option plan (ESOP) charge was ₹51.3 crore, compared with ₹84.2 crore a year earlier, and the pre-ESOP margin declined to 7.3% from 15.5%.

Management identified the listed parent’s corporate cost base, the ESOP charge and legal and professional costs as transition pressures. In Q2 FY27, AXISCADES carried ₹14.8 crore of corporate costs, booked the full ₹12 crore ESOP charge and incurred ₹14.5 crore of legal and professional charges; it stated a normal legal-cost run rate of ₹4 crore to ₹5 crore a quarter.

The operating units reported different Q2 outcomes. Defence generated ₹22.5 crore of EBITDA on ₹127.7 crore of revenue, XIDA generated ₹10.8 crore on ₹48.4 crore, and Cloud Wave generated ₹3.4 crore on ₹16.5 crore. The retained parent structure reported negative ₹26.3 crore of EBITDA, including the one-quarter ESOP charge.

What funding and operating milestones does AXISCADES have next?

AXISCADES marked the Phase 2 closing as revised and expects proceeds in February 2027, while describing Phase 1 as delivered. It also expects XIDA restructuring to complete in Q3 FY27 and says FY26 deferred revenue is due to be realised by Q4 FY27.

Management said a cost reset is under way ahead of Phase 2 closing. Corporate overheads are about ₹12 crore a quarter, while the ESOP charge is expected to run at about ₹6 crore a quarter from Q3 FY27, compared with ₹12 crore recognised in Q2 FY27.

AXISCADES said Space costs about ₹2 crore a quarter within corporate overheads and expects its first revenue from Q2 FY28. Its planned 240,000-square-foot Center for Advanced Manufacturing at Devanahalli is expected to be ready in Q4 FY28, although the company described that timing as a forward-looking statement rather than guidance.

Conclusion

AXISCADES entered the second half of FY27 with ₹624.4 crore of borrowings, up ₹348 crore in six months, after funding Cloud Wave, capital expenditure and working-capital requirements. Cloud Wave added ₹16.5 crore of Q2 revenue at a 20.3% EBITDA margin, while retained-business revenue rose 55% year on year to ₹378.9 crore and represented 54% of H1 group revenue.

The next funding event is the expected February 2027 Phase 2 closing, subject to NewCo incorporation and customer novations. AXISCADES has said interim funding will be arranged if needed, while management plans a cost reset before closing, XIDA restructuring in Q3 FY27 and initial Space revenue from Q2 FY28.