Cyient DLM — Q2 FY26 earnings call

Call held 14 Oct 2025

Management summary

Cyient DLM reported a mixed Q2 FY26, with revenue degrowth of 20% YoY to ₹310.6 crores, but strong margin expansion led to flat EBITDA at ₹31.2 crores. The company demonstrated robust order intake of nearly ₹500 crores, achieving a book-to-bill of 1.6 and growing its order book to ₹2,291 crores. Strategic shifts towards high-margin build-to-spec projects and diversification into automotive and Indian domestic markets are expected to drive future growth, with management anticipating a return to YoY growth by Q4 FY26.

Highlights

  • Revenue of ₹310.6 crores, a 20% YoY degrowth.

  • EBITDA at ₹31.2 crores, with margins increasing by 192 bps YoY to 10.05%.

  • Order intake of nearly ₹500 crores in Q2, leading to a book-to-bill ratio of 1.6.

  • Cumulative H1 order intake crossed ₹1,000 crores, reflecting 130% YoY growth.

  • Order book stands at ₹2,291 crores, with over 10% from high-margin build-to-spec projects.

  • Normalized PAT margin at 4%, with reported PAT at ₹32.1 crores (10.3% margin) due to an extraordinary earnout reversal.

  • Net working capital improved to 139 days from 165 days, with operational FCF at ₹46 crores.

  • Strategic focus on India and non-A&D sectors, particularly automotive and EV charging solutions, driving new wins.

Key financials

  1. Revenue ₹310.6 Cr -20%YoY
  2. EBITDA ₹31.2 Cr
  3. EBITDA Margin 10.1% +1.9%YoY
  4. PAT ₹32.1 Cr +108%YoY
  5. Reported Profit Margin 10.3%
  6. Normalized PAT Margin 4%
  7. Operational FCF ₹46 Cr
  8. Reported FCF ₹27 Cr
  9. Net Working Capital Days 139 days

What they filed

Q1 FY27: revenue up 34.5%, net profit up 128.6% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue389 444 428 278 311 −20%303 −32%369 −14%374 +35%
EBITDA32 28 57 25 31 −3%28 +0%43 −25%39 +56%
Net profit15 11 31 7 32 +113%11 +0%22 −29%16 +129%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • Aerospace
    37% Share of Revenue
  • Defence
    8% Share of Revenue
  • Industrial
    30% Share of Revenue
  • Medical
    15% Share of Revenue

Order book

high confidence

Total value

₹2,291 Cr

as of 2025-09-30 quantified

Inflow this quarter

₹500 Cr

Execution

Most orders are 18-24 months, BTS design work within <2 years, bulk manufacturing from FY28.

Composition

Mix 2 geographies
  • Rest of World 85%
  • India 14%

Share of order book by geography

Pipeline

deal pipeline tcv

Strong pipeline based on traction in India and B2B segments, advanced discussions with several promising companies.

Order book growth is firmly on track, supported by robust book-to-bill and strong pipeline, especially in India and B2B segments.

Source: Prepared remarks

Capital allocation

high confidence
  • Capex Capex disclosed
    • Land acquisition for own factory in Mysore
    Now the reported FCF is Rs. 27 crores. But that's also because there is a land acquisition in Mysore for building our own factory, which has resulted in that reported number being a little lower than what the operational free cash flow is, which is Rs. 46 crores.
  • M&A Altek Acquisition · Integrated

    Strategic advantage for US markets, client reassurance, delivery continuity.

    Earnout reversed due to performance conditions not met, resulting in an extraordinary gain this quarter. Working on achieving profitability and synergies.

    As you all remember, we had made an acquisition about a year ago and there were certain performance conditions to which the earnouts were tied. And those performance conditions have not been met. Therefore, the earnout is reversed in the books which comes in as other income, giving you an extraordinary gain this time. I want to assure you that the acquisition is intact, the company is doing well. It is just that the performance condition is not met. So, we are looking at Altek as a very key acquisition and a milestone for the company and it does position us very well for growth in the US markets.
  • Liquidity Liquidity disclosed 93% utilization of IPO funds raised, healthy cash balance, comfortably placed to fund any growth.
    We are healthily placed at 93% utilization of the cash that was raised during that. We also have a healthy cash balance. Despite the IPO money getting exhausted, we are comfortably placed today to fund any growth that might come.

Guidance & targets

Order Book

  • Book-to-bill ratio Order Book · FY26 · High confidence 1.4-1.5
    And we also expect for the year, as of now, what we see is the book to bill ratio may go to 1.4 to 1.5 for the year.

    — Rajendra Velagapudi

Revenue

  • YoY growth Revenue · Q4 FY26 · High confidence Growth
    Yes, we are absolutely working towards that and we expect the growth coming in the fourth quarter of this year.

    — Shrinivas Kulkarni

  • Built-to-spec (BTS) revenues Revenue · FY27 · High confidence Will go up
    And we definitely see that our BTS revenues will go up in FY27 compared to what we have currently in FY26.

    — Rajendra Velagapudi

  • Built-to-spec (BTS) contribution (>15%) Revenue · Long term · Medium confidence Will take a lot of time
    I think the contribution going to the number what you said will take a lot of time.

    — Rajendra Velagapudi

Profitability

  • Margin improvement Profitability · Next few quarters · High confidence Will continue
    And margin improvement is given by a favorable mix and scale, which will continue for the next few quarters.

    — Rajendra Velagapudi

  • QoQ margin improvement Profitability · High confidence Happening
    So, we do see the QOQ margin improvement as well happening? Yes.

    — Shrinivas Kulkarni

Production

  • Built-to-spec (BTS) mass production Production · FY28 onwards · High confidence From FY28 onwards (bulk)
    Almost all of them will go into mass production, but not in FY27. We have long design cycles. I think the first manufacturing order might be from FY28 onwards.

    — Shrinivas Kulkarni

Revenue Mix

  • US business share Revenue Mix · This year · High confidence 40%
    Our US business is roughly, I think, for this year, we expect 40% of our business to come from the US.

    — Shrinivas Kulkarni

  • QoQ revenue growth Revenue Mix · Current · High confidence Happening
    And now that we are expecting a growth quarter-on-quarter happening in the revenues, do we see a Q4 YOY growth for this year or will that happen in the 1st Quarter of FY27?

    — Maitri Shah

  • Industry mix (Defence vs Industrial) Revenue Mix · High confidence Less from Defence, more from Industrial
    Okay, you do see a fourth. And this will be less from the Defence side and more from the Industrial side of the business. Is that correct? Yes, that's correct.

    — Rajendra Velagapudi

What to watch in Q3 FY26

Altek acquisition profitability

Next quarter (Q3 FY26)
Current Still impacting profitability, synergies expected in year two.
Target Orders coming in this quarter, improved profitability.

Why it matters

Altek's performance is key to overall profitability and US market growth.

We will be expecting some of those orders will be coming in this quarter. And a similar thing, we are also seeing this synergy coming from their side to us, year two.

Risks & concerns

  • Geopolitical developments impacting key markets

    medium

    Israel is a key market, and the geopolitical situation there has had a significant impact on revenue and predictability. The Gaza-Hamas situation has slowed decision-making.

    Management acknowledged

  • Tariff situation in US market

    medium

    Tariffs impact US business, and the company is working with customers on solutions as low margins prevent direct absorption of costs.

    Management acknowledged

  • Volume loss leading to under-absorption

    low

    Despite revenue degrowth, EBITDA margins improved, but there was under-absorption due to volume loss, which the company is recovering from.

    Management acknowledged

Q&A highlights

5 direct, 1 evasive
Altek acquisition profitability and synergies Direct
So right now, we have some of the opportunities going on with the Altek, with our unit there in US in Torrington. So, some of our existing customers, we have submitted some of the quotes, and they are in the positive direction. We will be expecting some of those orders will be coming in this quarter. And a similar thing, we are also seeing this synergy coming from their side to us, year two.

Clarifies the path to profitability and synergy realization for the Altek acquisition, which has impacted current financials.

Asked by Balasubramanian

Built-to-spec (BTS) business scaling and contribution Partial
I think the contribution going to the number what you said will take a lot of time. But what we have currently is the contribution, whatever the share of the business, so it will increase in FY27 based on what we have today, which I said, one of the ones we had mentioned about the eVTOL for a Japanese customer. ... And we definitely see that our BTS revenues will go up in FY27 compared to what we have currently in FY26.

Provides a timeline for BTS revenue growth and clarifies that significant contribution (>15%) is a longer-term goal, managing expectations.

Asked by Balasubramanian

Impact of tariffs on US business and supply chain strategy Direct
Our US business is roughly, I think, for this year, we expect 40% of our business to come from the US. And look, I think there are many, many conversations going on with customers to see how we can offset the impact of the tariffs. ... Obviously, we will not be able to pay the tariff ourselves, given the low margins in this business. It has to be a solution that we work out with the customers to support.

Details the company's approach to navigating tariff challenges in a key market and highlights the customer-specific nature of solutions.

Asked by Sameet Sinha

Order book execution timeline and conversion to revenue Direct
I think the some of the orders, most of the orders are 18 months to 24 months. And wherever we have the BTS orders, which we just said that, that is initially the design work. I think even that also will be only within the less than 2 years, whatever we have the order book right now.

Provides clarity on the typical conversion cycle of the order book, which is crucial for revenue visibility.

Asked by Bhavik Mehta

Diversification of customer base and reduced dependency on top clients Direct
As you've seen in terms of expanding the non-A&D sector, is where we are working out. And we also have the sales team, which is basically right now focusing on the new customers. ... So, we will be seeing those trends in the next Q3-Q4. So, majority of the things will be happening from the India-based and the new customers.

Addresses a key investor concern about client concentration and outlines the strategy for broadening the customer base, particularly in India and non-A&D sectors.

Asked by Param Vora

Quantification of order book execution for next two quarters Evasive
No, we will not be able to provide that specific number, because that would then amount to giving guidance on the revenue itself. So, what I will just say is that there's a healthy amount of that order that is executable for the quarter.

Management declined to provide specific short-term revenue guidance from the order book, indicating caution or a desire to avoid formal guidance.

Asked by Adhiraj Singh

Timeline for mass production of BTS orders Direct
Almost all of them will go into mass production, but not in FY27. We have long design cycles. I think the first manufacturing order might be from FY28 onwards. ... Small ones are happening currently and they will continue in FY27 as well. But a lot of the bulk of the manufacturing orders will come in a little later.

Clarifies the long gestation period for large BTS projects, indicating that significant revenue from these will only materialize from FY28, managing short-term expectations.

Asked by Maitri Shah

2 min read 6 chapters

Detailed narrative

Q2 FY26 Financial Performance Overview

Cyient DLM reported a revenue of ₹310.6 crores for Q2 FY26, marking a 20% year-on-year degrowth. Despite this, EBITDA remained almost flat at ₹31.2 crores, driven by significant margin expansion of 192 basis points year-on-year, reaching double-digit figures of 10.05%. The reported PAT grew by 108% year-on-year to ₹32.1 crores, though this included an extraordinary gain from the reversal of an earnout related to an acquisition, with the normalized PAT margin standing at 4%.

Robust Order Book and Book-to-Bill Ratio

The company achieved a strong order intake of nearly ₹500 crores in Q2 FY26, resulting in a robust book-to-bill ratio of 1.6 for the quarter. This contributed to a cumulative H1 order intake exceeding ₹1,000 crores, representing a 130% year-on-year growth. The total order book now stands at ₹2,291 crores, with management expecting the full-year book-to-bill ratio to be between 1.4 and 1.5, indicating strong future revenue visibility.

Strategic Focus on Built-to-Spec (BTS) and Diversification

Cyient DLM is actively strengthening its build-to-spec (BTS) portfolio, which currently accounts for over 10% of its order book. These design-led engagements, such as a new order from a Japanese eVTOL urban air mobility company, are in development and expected to ramp up to mass production in coming years, with bulk manufacturing orders anticipated from FY28. The company is also diversifying its industry mix, with a strategic win in EV charging solutions and a focus on non-Aerospace & Defence sectors like industrial and automotive, aiming for less dependence on traditional segments.

Working Capital Management and Cash Flow

The company demonstrated improved working capital management, with net working capital days reducing from 165 to 139 days. This improvement, along with better DSO and customer advances, contributed to the fourth consecutive quarter of positive free cash flow, with operational FCF reported at ₹46 crores. The reported FCF was ₹27 crores, impacted by a land acquisition for a new factory in Mysore.

Geopolitical Impact and US Operations

Management acknowledged that geopolitical developments, particularly in Israel (a key market), have impacted revenue predictability and slowed decision-making. For its US operations, which contribute approximately 40% of the business, the company is actively working with customers to mitigate the impact of tariffs, exploring solutions like changing ship-to locations or routing products differently, as low margins prevent the company from absorbing these costs directly.

Outlook and Growth Trajectory

Cyient DLM anticipates continued positive momentum, with a promising H2 outlook. Management expects to return to year-on-year revenue growth by Q4 FY26, driven by strong pipeline in India and B2B segments, and continued margin improvement due to a favorable mix and scale. The company is also focusing on expanding its customer base and reducing dependency on top clients, with new customer wins and Indian-based opportunities expected to materialize in Q3-Q4 FY26.

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