Cyient DLM — Q4 FY26 earnings call

Call held 21 Apr 2026

Management summary

Cyient DLM reported a strong Q4 FY26 with sequential revenue growth and the highest EBITDA and PAT margins for the year, driven by focused execution and an improved business mix. Despite a 17% YoY revenue decline for FY26 due to geopolitical headwinds and a large order completion in FY25, the company achieved a record order book of INR24,166 million and a 1.5x book-to-bill ratio for the full year. Management expressed confidence in sustaining double-digit margins and expects strong year-over-year growth in FY27, supported by a robust pipeline and strategic focus on complex, higher-value programs.

Highlights

  • Order book momentum remains strong with a book-to-bill ratio greater than 1 each quarter, ending at 1.5x for the full year FY26. (Krishna Bodanapu, page 3)

  • Highest ever order backlog of INR24,166 million, providing strong visibility for the coming year. (Krishna Bodanapu, page 3; R.M. Subramanian, page 7)

  • Increasingly winning more complex, integrated, and critical programs, leading to longer life cycles, higher barriers to entry, and better predictability/profitability. (Krishna Bodanapu, page 3)

  • Achieved 10%+ EBITDA margins for the full year FY26, with Q4 EBITDA margin at 11.7% and PAT at 6.1%, the highest compared to all previous quarters. (Krishna Bodanapu, page 3; R.M. Subramanian, page 7)

  • Q4 FY26 revenue showed strong sequential growth, reaching INR3,691 million. (R.M. Subramanian, page 7)

Concerns

  • Significant geopolitical uncertainties (West Asia crisis, tariffs) led to temporary disruptions in schedules and execution plans in Q4 FY26. (Krishna Bodanapu, page 4)

  • Electronic component availability stress, particularly in the memory sector, impacted operations. (Krishna Bodanapu, page 4)

  • Q4 FY26 revenue was down 13.8% YoY, and full year FY26 revenue declined 17% YoY, primarily due to the closure of a large A&D order in FY25 and moderation in demand. (R.M. Subramanian, page 7)

  • Inventory days remained elevated through FY26, though showing reduction in Q4, and working capital remains elevated, with a target to reach 100-120 days. (R.M. Subramanian, page 8, 15)

Key financials

2 periods

Q4

  • Revenue
    3,691 Mn
    YoY -13.8%
  • EBITDA Margin
    11.7%
  • PAT
    224 Mn
    YoY -27.6%

FY26

  • Revenue
    12,615 Mn
    YoY -17%
  • Reported EBITDA Margin
    10.1%
  • Reported PAT
    733 Mn
    YoY +7.7%

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

  • Industry Segments (Revenue Share)
    — Aerospace, Industrial, Medical— Defense— Other Segments
  • Product Category (Revenue Share)
    48% PCBA— Box Build— Others
  • Geography (Revenue Share)
    90% Rest of the World

Order book

high confidence

Total value

₹24,166 Mn

as of 2026-03-31 quantified

Execution

executable over next 18-24 months

Pipeline

deal pipeline tcv

Order pipeline where teams are working to convert into order intake

Cancellations & deferrals

  • deferred: Materials delayed due to West Asia war impacting Q4 execution.
  • deferred: Israeli defense programs faced approval/clearance delays due to West Asia war impacting Q4 execution.
  • deferred: NPA approvals from customers caused delays impacting Q4 execution.
The order book is defined as purchase orders received from customers where material actions can be taken, providing strong revenue visibility and confidence for FY27 growth.

Source: Prepared remarks

Capital allocation

medium confidence
  • M&A Undisclosed deal Acquisition · Abandoned

    Evaluated a deal that did not go through

    Incurred M&A evaluation expenses of INR17.75 million

    The first one-off relates to M&A evaluation expenses amounting to INR17.75 million. We incurred the expense to evaluate a deal that did not go through.
  • M&A Earlier M&A deals (including Altek) Acquisition · Integrated

    Reversal of earn-outs from earlier M&A deals

    Earn-out reversals impacted normalized PAT for FY26

    The third item is the reversal of earn-outs from the earlier M&A deals. All these expense above are exceptional in nature and not reflective of normal business.

Guidance & targets

Profitability

  • EBITDA Margin Profitability · future · High confidence 10%+
    Margins this year at 10-plus percent were very good, and we believe that, that will sustain into the future.

    — Krishna Bodanapu

  • EBITDA Margin Profitability · long run · High confidence double-digit level
    Hopefully, our target in the long run is to maintain the EBITDA at the double-digit level and in terms of what we are doing, okay?

    — R. M. Subramanian

  • EBITDA Margin Profitability · next year · Medium confidence couple of basis points improvement
    With the growing volumes, there will be a couple of basis points improvement with respect to the operating leverage impact, which is on the positive side, okay? That's what we will continue to aim for in the next year.

    — R. M. Subramanian

Working Capital

  • Working Capital Days Working Capital · future · Medium confidence 100 to 120 days
    Our target is to reach about 100 to 120 in terms of the number of days, but we have some distance to go.

    — R. M. Subramanian

Market context

  • Year-over-year growth Revenue · FY27 · High confidence strong
    I think now FY '27, you'll be starting seeing the growth, year-over-year growth we'll be seeing it in all the quarters, four quarters, which is a very strong.

    — Rajendra Velagapudi

What to watch in Q1 FY27

Resolution of US Tariff Uncertainty

Next quarter or so
Current Still awaiting clarity, new opportunities emerging but not like past.
Target Clearer picture on US tariffs.

Why it matters

Impacts demand and order intake from US customers and overall business environment.

I think probably we can just clear that cloud probably the next one quarter or so, once we get full clarity from the U.S. tariffs. Okay?

Risks & concerns

  • Geopolitical uncertainties (West Asia crisis, tariffs)

    high

    Led to temporary disruptions in Q4 schedules, execution plans, and material delays; US tariff clarity still awaited.

    Both acknowledged

  • Electronic component availability stress

    medium

    Stress in the memory sector impacted operations and contributed to elevated inventory; proactive ordering for FY27.

    Management acknowledged

  • Elevated working capital

    medium

    Inventory days remained elevated through FY26, though reducing in Q4; target to reach 100-120 days.

    Management acknowledged

Q&A highlights

5 direct, 2 evasive
Q4 Revenue Miss and Geopolitical Impact Direct
I think the challenge the headwind what we had is one is the West Asia war impact. So because of that the materials got delayed... And we also had other headwinds in terms of the Israelis where we are working some other – some other this programs, defense programs. We could not get some of the approvals, clearances, because of – again, because of West Asia war which is going on there. And added to that, and we also have some of the NPA approvals from our customers.

Clarifies the specific external factors (geopolitical conflicts, supply chain delays, and regulatory approvals) that led to the Q4 revenue miss, which was a key concern for analysts.

Asked by Vaibhav Mishra

Quantification of Revenue Loss due to West Asia Evasive
We don't want to get into the exact quantification of this stuff. But if you look at it, some of them are postponed in terms of pushing into the next quarter, etcetera. But what we can broadly say is these are the reasons why there's been a gap between in terms of what we expected and what happened.

Management declined to provide specific figures for revenue loss, indicating a lack of transparency on the exact financial impact of geopolitical events, which could be a red flag for investors.

Asked by Disha

Order Book Definition and Consistency Direct
So when we say order book, so those are the purchase orders which we have got from our customers, because only that we will take it where we can take material actions. That's where we will consider as the order book. We won't take anything which is a TCV and all those, we won't take it as a part of our order book. Order book is very clear.

Clarifies the company's conservative definition of order book (only confirmed purchase orders with material actions), which is crucial for understanding the reliability of the reported backlog.

Asked by Sameet Sinha

Acquisition Strategy and Funding Partial
We continue to look for both organic and inorganic growth... We looked at sometime in the last quarter, but it will not go through. But we continue to look for opportunistically. And as long as it fits in our portfolio in terms of growth geographically or product-wise where we don't have that expertise, we will look for that, okay? So it depends on opportunities.

Indicates the company's ongoing M&A interest despite a recent abandoned deal and used IPO proceeds, suggesting potential future capital allocation for inorganic growth, but without specific targets or funding mechanisms.

Asked by Sameet Sinha

New Product Areas (Semiconductors/AI) Traction Direct
I mean, particularly on the equipment manufacturing for semiconductor equipment manufacturings. So we are doing a lot of the power boxes for the customers and a lot of those products which goes into the PCBAs, wire harness and the complete integration of those machinery, the subassemblies, which goes into that, that is where I think we are focusing today... And again, on the AI side, as I said, we are expanding. That's why I said we are now focusing more on those areas.

Provides insight into the specific sub-segments within semiconductors and AI where the company is focusing its efforts, highlighting strategic growth areas beyond traditional EMS.

Asked by Sameet Sinha

Q4 Margin Dip Explanation Direct
Yes, that's more reflected on the revenue drop and the operating deleverage impact, because the fixed cost continues to remain the same. That's the impact I was talking.

Explains that the Q4 margin dip was primarily due to lower revenue and the fixed cost base, rather than a negative shift in product mix, which is important for assessing the underlying profitability trend.

Asked by Harsh Sheth

Order Book Conversion to FY27 Revenue Evasive
We are not giving any guidance right now on that in terms of how much of the order intake will be converted as a revenue in FY '27. So we are not giving that guidance, but probably you'll be seeing that in the next quarters itself, starting from next quarter itself, we'll be seeing that growth.

Management declined to provide specific revenue guidance for FY27 despite a strong order book, leaving investors to infer growth based on qualitative statements, which can create uncertainty.

Asked by Shashank Jha

Geopolitical Impact on Tariffs and Supply Chain Fixes Direct
On the tariff side, yes, there is slightly – there was some mis-clarity, but still the cloud has not gone away... I think probably we can just clear that cloud probably the next one quarter or so, once we get full clarity from the U.S. tariffs... I think that's where our inventory also has gone up because of the materials where we have some partial materials, and we are working to ensure that we get the material. And also as Krishna said, there are also some challenges in terms of the lead times gone up for the memories, correct?

Highlights ongoing uncertainty regarding US tariffs and confirms that supply chain issues (especially for memory components) are still a concern, but management is taking proactive steps like advanced ordering for FY27.

Asked by Deepak

2 min read 7 chapters

Detailed narrative

Q4 FY26 Performance Overview

Cyient DLM reported a strong Q4 FY26 with revenue of INR3,691 million, reflecting sequential growth. The company achieved its highest EBITDA margin of 11.7% and PAT margin of 6.1% for the year in Q4. This performance was attributed to focused execution on operating efficiency and a favorable business mix, despite a 13.8% year-on-year revenue decline for the quarter.

Full Year FY26 Financials and Margin Resilience

For the full year FY26, revenue stood at INR12,615 million, marking a 17% year-on-year decline, primarily due to the completion of a large A&D order in FY25 and moderated demand. Despite this, the company demonstrated strong operating resilience, maintaining double-digit EBITDA margins, with normalized EBITDA at 10.3% and reported EBITDA at 10.1%. Reported PAT increased by 7.7% year-on-year to INR733 million, with a 5.8% margin, indicating improved profitability despite revenue headwinds.

Record Order Book and Strong Pipeline

Cyient DLM closed FY26 with a record order book of INR24,166 million, which is INR5,105 million higher than the previous year and the highest in 2.5 years. The company achieved a book-to-bill ratio of 1.5x for the full year, with consistent ratios greater than 1 each quarter. The sales pipeline is robust, valued at closer to $0.5 billion, providing strong revenue visibility and confidence for future growth, with orders executable over an 18-24 month range.

Geopolitical Impacts & Supply Chain Challenges

Significant geopolitical uncertainties, including the West Asia crisis and tariffs, led to temporary disruptions in Q4 FY26. Material delays due to the West Asia conflict, issues with Israeli program approvals, and delays in NPA approvals impacted Q4 revenues. The company acknowledged stress in electronic component availability, particularly in the memory sector, and is proactively ordering critical long-lead items for FY27 to mitigate future supply chain risks.

Strategic Focus on Higher-Value Engagements

The company is strategically shifting from being solely a manufacturing partner to a value-adding strategic partner, focusing on more complex, integrated, and critical programs. These engagements come with longer life cycles, higher barriers to entry, and better predictability/profitability. This approach, combined with investments in sales organization and technology, is expected to sustain the company's growth and double-digit margins into the future.

Working Capital Management and IPO Proceeds Utilization

Working capital remained elevated through FY26, largely due to advanced stocking for long-lead components and program ramp-ups, though inventory days showed reduction in Q4. The company aims to reduce working capital days to 100-120. Cyient DLM confirmed full utilization of its IPO proceeds by March 2025, in compliance with defined objectives, and the account stands closed.

New Growth Avenues and M&A Activity

Cyient DLM is targeting selective growth avenues in automotive, Indian defense, and AI infrastructure manufacturing, including vertical integration across cable, sheet metal, and machining. The company is seeing traction in semiconductor equipment manufacturing, focusing on power boxes, PCBAs, and subassemblies. While a recent M&A evaluation did not proceed, incurring INR17.75 million in expenses, the company continues to explore both organic and inorganic growth opportunities.

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