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    Cyient DLM

    CYIENTDLM
    Capital Goods·22 Jul 2025
    Management Summary

    Cyient DLM reported a robust Q1 FY26 with strong order intake and improved margins, despite muted revenue growth due to a large customer order ending and Middle East conflict. The company is strategically focusing on high-reliability sectors, leveraging its hybrid India-US model, and expects double-digit EBITDA margins for the year, with a long-term target of 12-13%.

    Highlights

    8
    • Revenue grew 8% YoY to INR 2,784 million in Q1 FY26.

    • EBITDA increased 25.3% YoY to INR 251 million, with margin expanding 125 bps to 9%.

    • Net Profit stood at INR 75 million, with a margin of 2.7%.

    • Order intake was INR 515 crores, the highest in 10 quarters.

    • Order backlog reached INR 2,138 million, growing INR 225.7 crores QoQ.

    • Book-to-bill ratio was close to 2 in Q1, with confidence to maintain above 1 for FY26.

    • Generated INR 80 crores in free cash flow during the quarter.

    • Capacity utilization is low (55-60%), offering significant headroom for growth without major capex.

    Concerns

    1
    • Middle East conflict impacting supply chain

    Key financials

    Single quarter

    06 metrics
    1. 01Revenue2,784 Mn+8%YoY
    2. 02EBITDA251 Mn+25.3%YoY
    3. 03EBITDA Margin9%
    4. 04PAT75 Mn
    5. 05PAT Margin2.7%

    Order Book

    high confidence

    Total Value

    ₹ 2,138 million

    as of 2025-06-30

    quantified
    11.8% QoQ

    Inflow this qtr

    ₹ 515 crores

    Execution

    executable over next 18-24 months depending on the order

    Composition

    Mix3 segments
    • Aerospace & Defense49.0%
    • Industrial25.5%
    • Medical25.5%

    Share of order book by segment

    Cancellations / Deferrals

    • deferred:Delay in securing repeat order from a major customer
    • deferred:Q1 deliveries impacted due to Middle East conflict

    "The order book shows strong momentum with higher-margin orders, and the company is confident in sustaining a book-to-bill ratio significantly above 1."

    Source:
    Prepared remarks

    Capital allocation

    3
    high confidence
    CategoryHeadline
    Capex

    ₹40 crores

    from IPO proceeds

    M&A

    Inorganic expansion targets

    acquisition · pending regulatory

    Liquidity

    Liquidity disclosed

    Used INR 60 crores of IPO proceeds for working capital in Q1. INR 100 crores left from IPO proceeds for rest of FY26 (INR 60 crores for WC, INR 40 crores for CAPEX). No pressure to raise funds due to 'heady cash position'.

    Guidance & targets

    5
    CategoryTargetPriority
    Revenue
    Long-term Revenue Growth
    30% CAGR
    High
    Revenue
    B2S Revenue Contribution
    5%
    Medium
    Revenue
    B2S Long-term Revenue
    100+ million
    Low
    Margin
    Sustainable EBITDA Margin
    12-13%
    Medium
    Order Book
    Book-to-Bill Ratio
    more than 1
    High

    Book-to-Bill Ratio

    Next quarter / FY26
    CurrentClose to 2 (Q1 FY26)
    TargetMore than 1

    Why it matters

    Indicates the company's ability to secure new orders and sustain future revenue growth.

    With momentum building, we are confident and suggest in sustaining this trajectory and achieving and continuing to achieve a book-to-bill ratio significantly above 1 going forward.

    How to verify

    order_book.book_to_bill_ratio

    Risks & concerns

    4
    RiskSeverity

    Delay in securing repeat order from a major customer

    A delay in securing a repeat order from a major customer temporarily affected growth in Q1 FY26.Management acknowledged

    medium

    Middle East conflict impacting supply chain

    Q1 deliveries were impacted due to the conflict, causing supply chain disruptions, rerouting, increased flight times, and higher costs.Management acknowledged

    high

    Amortization of intangibles impacting PAT margin

    Non-cash amortization charges from purchase price allocation are impacting PAT margin.Management acknowledged

    low

    Lower other income impacting PAT

    Reduced other income, due to lower unutilized IPO funds compared to last year, contributed to lower PAT.Management acknowledged

    low

    Q&A highlights

    8

    “On the B2S, as I said, in the FY '26 immediately, we won't be seeing much revenue coming over on this one, so it will be probably 5% of the revenue in FY '26. Otherwise, we will be seeing as I said, some of the things which are right now in the pipeline, where we will be working on this, so probably both things will be having maybe 100-plus million of revenue which we will be seeing over the years.”

    Provides specific revenue guidance for the new B2S segment in the short and long term, indicating its potential impact.

    asked by Balasubramanian A

    2 min read7 chapters

    Detailed Narrative

    01

    Q1 FY26 Performance Overview

    Cyient DLM reported Q1 FY26 revenue of INR 2,784 million, marking an 8% year-on-year growth. EBITDA increased by 25.3% year-on-year to INR 251 million, with the EBITDA margin improving by 125 basis points to 9%. Net profit stood at INR 75 million, representing a 2.7% margin, which was impacted by amortization of intangibles and lower other income.

    02

    Strong Order Intake and Backlog

    The company achieved its highest quarterly order intake in 10 quarters, totaling INR 515 crores. This contributed to a robust order backlog of INR 2,138 million, showing a quarter-on-quarter growth of INR 225.7 crores. The book-to-bill ratio for Q1 was close to 2, and management is confident it will remain above 1 for the full year, with approximately 50% of the new orders executable within the current fiscal year.

    03

    Strategic Focus and Market Opportunities

    Cyient DLM is accelerating its growth trajectory by strengthening global partnerships and deepening its presence in high-reliability sectors such as Aerospace, Defense, Medical, and Industrial. The company is observing a shift towards regional manufacturing, with the China Plus One strategy benefiting its hybrid India and US model. Opportunities are also emerging in renewable energy, EV adoption, robotics, and automation, supported by PLI schemes in India.

    04

    Leadership Transition and B2S Segment Growth

    Mr. Rajendra Velagapudi has been appointed CEO, in addition to his role as Managing Director, to oversee overall operations. The company added one new global logo, Deutsche Aircraft, in Q1 for BTS projects and is finalizing two major B2S orders. The B2S segment is expected to contribute approximately 5% of FY26 revenue, with a long-term potential of over INR 100 million.

    05

    Margin Expansion and Operating Leverage

    The company's EBITDA margin improved to 9% in Q1, driven by a better revenue mix with higher-margin orders. Management anticipates achieving double-digit EBITDA margins for the current year and a sustainable 12-13% margin in the early teens over the next 3-4 years. Current capacity utilization is low (55-60% on a full-year basis with 2 shifts), indicating significant headroom to double revenue without substantial new CAPEX, leveraging indirect costs.

    06

    Supply Chain Disruptions and Mitigation

    Q1 deliveries were impacted by the Middle East conflict, leading to supply chain disruptions, rerouting, increased flight times, and higher costs. This contributed to muted revenue growth for the quarter. However, management noted that the situation seems to be under control and expects these pushouts to correct within a quarter, with growth anticipated in other areas of the group.

    07

    Capital Allocation and Liquidity

    The company generated INR 80 crores in free cash flow during Q1. From IPO proceeds, INR 60 crores were utilized for working capital in Q1, with INR 100 crores remaining for the rest of the year (INR 60 crores for working capital and INR 40 crores for CAPEX). IPO funds earmarked for M&A have been fully utilized, and any future M&A would require new fundraising. The company maintains a 'heady cash position' with no immediate pressure to raise funds.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.