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Defense Segment drags revenue, Margins expanded

We cut our earnings estimates by 2.5% for both FY26/FY27E mainly with correction in OI. However, CYIENTDL is confident to report 10%+ EBITDA margin in FY26 with improvement in revenue through gradual pickup in orderbook. We have revised TP to Rs540 (Rs546 earlier), based on 30x FY27E earnings and maintain our recommendation to ‘Accumulate’. CYIENTDL defense segment got impacted due to completion of contract from domestic client (BEL), with the order book remained flat YoY to Rs 21bn. However, the company remains positive on maintaining book to bill ratio to >1x in FY26. In Q1FY26, it added a new logo, has two B2S orders currently in the finalization stage and order intake of ~ Rs 5,150mn, 50% of this executable in FY26 . For FY26, the company expects growth to be driven by the Aerospace, Industrial, and MedTech segments, with a margin of double digit. We estimate FY25-27E revenue/EBITDA/PAT CAGR of 22.1%/32.3%/43.7%, with EBITDA margin expansion of ~160bps. Maintain ‘Accumulate’

Revenues increased by 8.0%, Adj. PAT declined by 29.6%: Sales grew by 8.0% YoY to Rs2.8bn (PLe: Rs2.8bn). Aerospace/Industrial/Medtech/Railway segment grew by 66%/397%/138%/224% YoY and Defense segment decline by 83% YoY due to completion of order. Aerospace/Industrial/Medtech segment contributes 40%/23%/22% to the revenue. EBITDA grew by 25.3% YoY to Rs 251mn (PLe: Rs 221mn). EBITDA margins expanded by ~130bps to 9.0% (PLe: 8.0%). PBT declined by 28.7% YoY to Rs 101mn (PLe: Rs 86mn).PAT declined by 29.6% YoY to Rs 75mn (PLe: Rs 64mn). The company order book stood at Rs 21bn in Q1FY26.

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