Cyient DLM’s strong order book supports AI, robotics and semiconductor growth

Investment View and Business Overview

ICICI Direct Research’s September 30, 2026 company update on Cyient DLM Limited retains its BUY recommendation and revises the target price to Rs 1,100. The broker believes Cyient DLM has entered a multi-year growth phase, supported by healthy order inflows, improving execution and expansion into AI data centres, robotics and semiconductor equipment.

Cyient DLM is an integrated electronics manufacturing services and design-led manufacturing provider offering design-led manufacturing, printed circuit board assemblies, box builds and mission-critical systems. Its FY26 revenue mix comprised aerospace and defence at 52 per cent, industrials at 27 per cent, medtech at 19 per cent and other businesses at 2 per cent.

Growth Outlook

The central growth driver is entry into emerging, high-growth segments during FY27E. ICICI Direct sees a multi-year semiconductor opportunity as supportive government policy and investments by multinational companies strengthen India’s electronics supply chain.

• In robotics, Cyient DLM intends to focus on high-reliability subsystems, control electronics and test assemblies.
• The broker also highlights the AI infrastructure and data-centre opportunity. India’s data-centre capacity was around 1.6 GW in mid-2026 and is expected to reach around 6 GW by 2029.
• Global data-centre capacity is expected to increase by around 100 GW through 2030, according to reports cited by the broker.

Order Book and Execution Visibility

Cyient DLM had an order book of around Rs 2,599 crore at the end of Q1 FY27, which was more than twice FY26 revenue. Management has highlighted an approximately US$1 billion order pipeline for the design-led business across FY27 to FY34. Management’s medium-term guidance is for a consistent 25 to 30 per cent revenue CAGR.

ICICI Direct believes this pipeline, together with higher exposure to complex, high-margin, low-volume products, provides a foundation for sustainable growth.

Margin Expansion Opportunity

Cyient DLM recorded double-digit EBITDA margins for four consecutive quarters. Management has indicated that EBITDA margin could rise from the current 10 per cent-plus level to 11 to 13 per cent during FY27E to FY29E as capacity utilisation improves and the company enters AI data centres and robotics.

Management sees potential for margins of around 13 to 18 per cent after FY30E in a transformation phase, when more complex and higher-margin build-to-specification products are executed. Build-to-specification revenue represented around 6 per cent of FY26 revenue.

Financial Performance and Estimates

Actual FY26 revenue was Rs 1,261 crore, down 17.0 per cent year on year. EBITDA was Rs 127 crore, with an EBITDA margin of 10.0 per cent. Profit after tax was Rs 73 crore and EPS was Rs 9.2.

ICICI Direct forecasts revenue of Rs 1,652 crore in FY27E and Rs 2,064 crore in FY28E, with EBITDA margins of 11.2 per cent and 12.1 per cent respectively. The broker estimates profit after tax of Rs 99 crore in FY27E and Rs 145 crore in FY28E, implying EPS of Rs 12.5 and Rs 18.3 respectively.

Valuation and Key Risks

ICICI Direct values Cyient DLM at 60 times FY28E EPS to arrive at its revised Rs 1,100 target price.

Key risks identified by the broker are customer concentration, working-capital management and geopolitical uncertainties. Working-capital intensity remains relevant, with FY26 inventory days at 182.1 and debtor days at 98.8.

The investment case could be strengthened by execution of the order book, conversion of the design-led pipeline, increasing capacity utilisation and a higher mix of complex products. It could weaken if customer concentration, working-capital pressures or geopolitical conditions affect execution or demand.