Cyient DLM's record order book and B2S ramp support sustained growth

Investment View and Growth Thesis

ICICI Direct Research’s July 22, 2026 result update views Cyient DLM Limited as having entered a multi-year growth phase, supported by healthy order inflows, improving execution and expansion into AI infrastructure, data centres, robotics and semiconductor capital equipment.

Cyient DLM is an integrated Electronics Manufacturing Services and Design-Led Manufacturing provider, specialising in design-led manufacturing, printed circuit board assemblies, box builds and mission-critical systems. Its FY26 revenue mix comprised aerospace and defence at 48%, industrials at 26%, medtech at 20% and others at 7%.

ICICI Direct maintains a BUY recommendation with a target price of Rs 780, valuing the stock at 43 times FY28E EPS.

Q1 FY27 Financial Performance

Cyient DLM reported a strong Q1 FY27 recovery. Revenue was Rs 373.8 crore, up 34.3% year on year and 1.3% sequentially, as the effect of a high base from a large defence order faded and execution improved.

Aerospace revenue rose about 41% year on year to roughly Rs 157 crore, or 42% of quarterly revenue. Industrial revenue increased about 87% year on year to roughly Rs 120 crore, or 32% of revenue. Defence revenue grew around 34% year on year, whereas healthcare was broadly flat, declining 2%. Gross margin declined 226 basis points year on year to 37.9% because of geopolitical pressure, while operating expenses remained contained.

Order Book, Customers and Execution Outlook

Management reported a record order book of Rs 2,598 crore at the end of Q1 FY27 and order inflow of Rs 552 crore, producing a 1.5 times book-to-bill ratio that it expects to sustain through FY27.

Around 70% of inflows came from existing customers and 30% from customers added over the previous four to six quarters. Two new customers were added in industrial and automotive. Management expects growth momentum to continue in Q2 FY27 and the remainder of FY27, supported by order inflows and execution.

Aerospace remains Cyient DLM’s strongest moat because of high qualification barriers and long product life cycles. Honeywell aerospace programmes are entering production, with a meaningful revenue ramp expected over the next 18 months, while Thales and other global aerospace customers continue to show momentum. Nadcap certification for cable-harness assembly at the Mysore facility further strengthens the company’s aerospace capability.

Build-to-Specification and New Growth Opportunities

Management is scaling Build-to-Specification, or B2S, with its lab expanded from 6,000 square feet to 15,000 square feet. B2S is expected to achieve double-digit scale over the next 12 to 18 months and contribute 250 to 300 basis points to long-term EBITDA-margin improvement.

Management’s EBITDA-margin aspiration is 11% to 13% during the FY27E to FY29E expansion phase and about 13% to 18% after FY30E in the transformation phase, when more complex, high-margin B2S products are executed.

AI infrastructure, data centres, robotics and semiconductor equipment are identified as long-term opportunities. Semiconductor capital equipment is seeing healthy traction, with meaningful revenue growth expected over the next 6 to 12 months. The company has added dedicated commercial leadership for these opportunities, with further product and customer details expected over the next two to three quarters.

Earnings Estimates and Valuation

ICICI Direct estimates revenue to grow at about a 28% CAGR over FY26 to FY28E, from Rs 1,261 crore in FY26 to Rs 1,652 crore in FY27E and Rs 2,064 crore in FY28E.

The broker raised its FY28E EBITDA-margin estimate to about 12.1% from 11.6%.

Key Risks and Operating Considerations

• Customer concentration: Dependence on key customers remains a risk.
• Working-capital management: Working capital is elevated because inventory has been increased to mitigate geopolitical and supply-chain disruptions. Management expects normalisation over time.
• Geopolitical uncertainties: Middle East disruptions continue to affect logistics costs and shipment timelines. Proactive inventory planning has avoided material operational impact, and management expects limited impact in Q2.