Cyient DLM order book supports growth as FY27 margin investments weigh
Cyient DLM Ltd.
Buy
₹1,030
₹901
₹1,320
28.16%
Investment View and Target Price
In its October 15, 2026 results update on Cyient DLM, Motilal Oswal Financial Services reiterated its Buy rating and target price of Rs 1,320. The broker believes Cyient DLM is entering a multi-year growth phase, supported by continued aerospace momentum, a rising contribution from box-build manufacturing, semiconductor capital-equipment ramp-up and four Electronic Products programmes that could scale meaningfully from FY30.
2QFY27 Operating and Financial Performance
Cyient DLM reported consolidated revenue growth of 27 per cent year on year to Rs 390 crore in 2QFY27. Aerospace, defence and MedTech revenues grew 61 per cent, 11 per cent and 2.5 times year on year respectively, while industrial and auto and other revenues declined 41 per cent and 86 per cent.
| Metric | 2QFY27 | Year-on-year change |
|---|---|---|
| Revenue | Rs 390 crore | 27% growth |
| Aerospace revenue | — | 61% growth |
| Defence revenue | — | 11% growth |
| MedTech revenue | — | 2.5 times growth |
| Industrial revenue | — | 41% decline |
| Auto and other revenue | — | 86% decline |
Box-build accounted for 37 per cent of revenue in 2QFY27, compared with 25 per cent in 2QFY26. The consolidated order book reached a record Rs 2,810 crore, up 23 per cent year on year, following quarterly order intake of about Rs 610 crore versus an average of Rs 470 crore over the preceding eight quarters. Motilal Oswal views the backlog as reinforcing revenue visibility for 2HFY27 and beyond.
Margins, Earnings and Cash Flow
Operating performance was below Motilal Oswal's expectations. Gross margin contracted 380 basis points year on year to 37.4 per cent because of prototype development, while EBITDA margin declined 130 basis points to 8.7 per cent against the broker's 10.5 per cent estimate. EBITDA increased 10 per cent year on year to Rs 34 crore, below the Rs 41 crore estimate.
Adjusted PAT rose 26 per cent to Rs 16 crore, below the Rs 23 crore estimate, after adjusting for a Rs 18 crore gain on fair valuation of the earnout liability. In 1HFY27, revenue, EBITDA and adjusted PAT increased 30 per cent, 30 per cent and 83 per cent respectively to Rs 770 crore, Rs 73 crore and Rs 37 crore.
| Metric | 2QFY27 actual | Motilal Oswal estimate | Year-on-year change |
|---|---|---|---|
| Gross margin | 37.4% | — | Down 380 bps |
| EBITDA margin | 8.7% | 10.5% | Down 130 bps |
| EBITDA | Rs 34 crore | Rs 41 crore | 10% growth |
| Adjusted PAT | Rs 16 crore | Rs 23 crore | 26% growth |
Cash flow from operations fell 90 per cent year on year to Rs 14 crore in 1HFY27 owing to higher raw-material build-up amid the West Asia crisis. Net cash was Rs 23 crore at September 2026, while net working-capital days were 153.
Participating in Future Growth Themes
Structural changes and innovation can create long-term investment opportunities. DSIJ's Vriddhi Growth focuses on businesses positioned around emerging trends and scalable growth opportunities.
Management Guidance and Growth Outlook
Management guided for FY27 EBITDA margin of about 9 to 10 per cent and a return to double-digit margins from FY28. It attributed near-term pressure principally to investments in sales, marketing and product development, including costs that are fully expensed before associated revenue is realised.
- 2HFY27 revenue growth is expected to be above 30 per cent year on year.
- Quarterly order intake is expected to exceed Rs 600 crore over the next two quarters.
- Management expects continued momentum into FY28.
- Quarterly growth may vary with material availability, customer-site readiness and programme execution schedules.
- The existing order book generally has an 18 to 24-month execution horizon.
Electronic Products and New Programme Opportunities
Management said the Electronic Products opportunity covers four programmes with aggregate potential close to USD 1 billion over seven to nine years. This potential represents programme-lifetime value, not annual revenue, and is not currently included in the reported order book.
Engineering, prototype and testing work is underway, with initial production potentially beginning in FY29 and a fuller ramp from FY30. Semiconductor capital equipment has already generated revenue, while updates on AI and data-centre infrastructure and robotics opportunities are expected by FY27-end.
Estimates and Valuation
Motilal Oswal reduced FY27 adjusted PAT estimates by 16 per cent, reflecting revised margin assumptions, while retaining FY28 and FY29 earnings estimates. It forecasts revenue, EBITDA and adjusted PAT compound annual growth of 30 per cent, 41 per cent and 63 per cent respectively over FY26 to FY29E.
| Forecast metric | FY26 to FY29E CAGR |
|---|---|
| Revenue | 30% |
| EBITDA | 41% |
| Adjusted PAT | 63% |
The target price is based on 50 times September 2028 estimated EPS, implying a 0.8 times PEG ratio.
Investment Thesis and Key Risks
The thesis depends on order-book conversion, aerospace momentum, margin recovery through operating leverage and successful programme execution.
Key risks
- Sustained pressure from upfront investments.
- Delays in the transition from prototype to production.
- Material availability constraints.
- Uncertain timing of pipeline conversion.
Disclaimer: This is a summary of a research report published by the broker/research house identified above. The views, recommendations, target prices and estimates are those of the respective broker and do not represent DSIJ investment advice. The summary may be AI-assisted, hence please refer to the original report for complete details, disclosures and risks.
