Detailed Narrative
Strong Q4 FY25 Performance and Full Year Growth
Cyient DLM delivered robust Q4 FY25 consolidated results, with revenue growing 18.3% YoY to INR 428.1 crores. EBITDA surged 50.9% YoY to INR 57.4 crores, resulting in an EBITDA margin of 13.4%, a 290 bps expansion. For the full fiscal year 2025, consolidated revenue reached INR 1519.6 crores, marking a 27.5% YoY growth, with adjusted EBITDA at INR 145.2 crores, up 30.8% YoY.
Altek Integration and US Market Expansion
The integration of the Altek acquisition is now fully complete, significantly enhancing Cyient DLM's manufacturing presence in the US. This strategic move allows the company to capitalize on new opportunities arising from US tariffs on China, with many OEMs showing interest. Altek's focus on high-value, low-volume, and complex products in industrial, aerospace, and medical sectors aligns well with the company's core capabilities, offering onshore proximity to clients' R&D centers.
Evolving Business Mix and Geographic Focus
The company's industry mix is becoming more diversified post-Altek, with Medical contributing 35% and Industrial 14%. While defense saw degrowth due to the completion of a large Indian customer order, the aerospace segment grew 53%. Management anticipates a future geographic mix of 80% from the rest of the world and 20% from India, with higher growth expected from international markets in the near term.
Margin Sustainability and Working Capital Improvement
Cyient DLM achieved double-digit margins in Q4 FY25 and expects to sustain these levels, targeting around 10-12% for the full year FY26, even after accounting for one-off📎 gains. Working capital management showed progress, with DIO reducing by 6 days. The company generated INR 53 crores of positive cash in Q4 FY25 and is targeting positive operating cash flow for FY26 through continued focus on DSO, DIO, and DPO.
Order Backlog and Pipeline Outlook
The order backlog stood at INR 1906 crores, providing approximately 18 months of visibility. While the backlog has been down in FY25, management expressed strong confidence in rebuilding it in the new fiscal year, citing a robust pipeline. New wins, particularly from US operations, are expected to convert to revenue in the later part of FY26 due to the complex nature and certification requirements of these programs.
Capital Allocation and Debt Strategy
Of the IPO proceeds, 76.6% have been utilized, primarily for the Altek acquisition, with INR 115-120 crores remaining for incremental working capital. Capex remains substantially underutilized. The company funded part of the Altek acquisition with attractive dollar debt linked to SOFR, which includes a one-year moratorium on principal. Management expects a reduction in overall interest costs in FY26 due to loan restructuring and its net exporter status, which allows for greater reliance on PCFC loans.
New Client Acquisitions and Growth Drivers
Cyient DLM onboarded 6 new logos in FY25, 5 of which are large multinational A-list companies. These new clients, particularly in the medical and industrial sectors, are expected to contribute significantly to future revenue and order backlog, with each having the potential to become a $50 million-plus client annually. The company's unique value proposition, including its engineering capabilities, is a key differentiator in securing these larger engagements.