Cyient

The DET segment experienced a sequential revenue decline of 2.4% in constant currency and 2.1% in USD for Q4 FY26, reaching $163.5 million. Year-over-year, constant currency revenue declined by 1.5%. Despite this, the gross margin improved by 114 bps sequentially to 38.9%, and the EBIT margin stood at a resilient 12.4%. For the full year FY26, DET revenue was $657.6 million, with a marginal constant currency decline of 0.7%, and a normalized EBIT margin of 12.2%. Management is targeting mid-to-high single-digit organic growth for DET in FY27 and aims for a 15% EBIT margin by Q4 FY27.

Cyient Semiconductor reported Q4 revenue of $7.2 million, marking a 5% sequential improvement and its fourth consecutive quarter of quarter-on-quarter growth. The full-year revenue for FY26 stood at $25.7 million, though Q4 EBIT was negative $2.8 million due to ongoing investments in team building and IP. The company successfully closed a 74% majority stake in Kinetic Technologies and won the MeitY-backed Semiconductor Complex of India Limited fab modernization program. Management expects FY27 revenue to reach $100 million, with a focus on custom ASIC and ASSP products, primarily in power management, aiming for breakeven by early next year.

Cyient DLM, the manufacturing business, achieved a book-to-bill ratio of 1.5x for FY26, indicating strong future revenue visibility. The company is entering FY27 with its highest order book in history, which is expected to drive a very strong year. Profitability for the year was 10.3%, demonstrating sustained double-digit profitability through focus on the right segments, operational excellence, and cost discipline. This strong foundation, coupled with a mature pipeline, positions Cyient DLM for continued execution of its growth plans.

The Board approved a significant share buyback of up to 6.4 million equity shares at INR1,125 per share, totaling INR720 crores, with promoters and key management personnel opting not to participate. This decision underscores confidence in the company's intrinsic value and aims to enhance shareholder value. Separately, the Board agreed in principle to explore a debt and equity fundraise for the Cyient Semiconductor business, with an initial dilution target of 10-12%, to support its growth and path to breakeven without penalizing Cyient's main shareholders.

Geopolitical uncertainty had an impact on the business, leading to West Asia energy deals being pushed out from Q4 FY26, with an expected impact in Q1 FY27. Additionally, the strategic acquisition, Project Astro, which was expected to bring a step change to the DET business, has been paused. This decision was made after incurring an exceptional charge^📎 of INR71 crores for due diligence, due to the rapid evolution of AI and prevailing geopolitical instability, allowing for a more educated decision in the coming quarters.

Cyient is actively rolling out an engineering intelligence platform to codify fragmented engineering data and workflows, leveraging AI to deliver business results through industry playbooks. Management sees significant opportunities in AI, particularly in structuring operations, manufacturing, and supply chain data, which could transform outsourced spend from $100 billion to $3 trillion. While acknowledging potential compression and 20-30% productivity improvements in some software development work (a small portion of the business), the overall AI threat is considered minimal, with the company heavily invested in preparing for AI's impact across service lines.