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CYIENTDL’s margins expanded by ~390bps in Q3FY26, due to decline in the share of the lower-margin Defense segment. The company reported exceptional items in Q3FY26, M&A-related costs of Rs17.8mn, and a wage code impact of Rs16.4mn. In Q3FY26, the company added 2 new clients: in the Medical segment, focused on battery management systems, and in the Industrial segment, supporting high-precision and electrical motor controls. The Build-to-Specification (B2S) segment is expected to contribute 6–7% to the topline in FY26, with double-digit contribution from FY27, further supporting margin expansion. CYIENTDL expects revenue growth to be well diversified over the next 2–3 years, with contributions from the Aerospace, Industrial, Defense and Automobile segments. We estimate FY25-28E revenue/EBITDA/PAT CAGR of 12.7%/18.2%/23.4%, with EBITDA margin expansion of ~140bps. We cut our earnings estimates by 2.8%/2.8% for FY27/FY28E and Maintain ‘Accumulate’ rating with a TP of Rs418 (Rs439 earlier), based on 26x Mar’28 earnings.

Q3FY26 financial performance: Sales declined by 31.7% YoY to Rs3.0bn (PLe: Rs3.8bn). Aerospace/Industrial/Railway segment grew by ~15%/58%/515% YoY, whereas Defense declined by 88% YoY due to large order completion and Medtech declined by 39% YoY. Aerospace/Industrial/Medtech segment contributed 37%/30%/16% to revenue in Q3FY26. EBITDA grew by 9.9% YoY to Rs309mn (PLe: Rs365mn). EBITDA margin expanded by ~390bps to 10.2% (PLe: 9.5%). In Q3FY26, the company reported exceptional items, M&A-related costs of Rs17.8mn, and a wage code impact of Rs16.4mn. PBT remained flat YoY at Rs149mn (PLe: Rs204mn). PAT grew by 2.2% YoY to Rs112mn (PLe: Rs151mn). The company’s orderbook stood at Rs23bn in Q3FY26 vs. Rs21bn in Q3FY25.

9MFY26 financial performance: Sales declined by 18.2% YoY to Rs8.9bn. Aerospace/Industrial/Medtech/Railway segment grew by ~40%/154%/24%/433% YoY and Defense declined by ~88% YoY due to large order completion in Q1FY26. Aerospace/Industrial/Medtech segment contributed 38%/28%/18% to the revenue in 9MFY26. EBITDA grew by 9.3% YoY to Rs872mn. EBITDA margin expanded by ~250bps to 9.8%. PBT declined by 9.5% YoY to Rs453mn. Adj PAT declined by 6.4% YoY to Rs347mn

Con call highlights: 1) CYIENTDL expects its revenue growth to be well diversified over the next 2–3 years, with contributions from the Aerospace, Industrial, Defense, and Automobile segments. 2) In Q3FY26, customer concerns regarding elevated tariff (~50%) revenue was impacted. With the company working closely with customers and offering multiple mitigation options to reduce the effective tariff impact, product offtake should resume from Q4FY26. 3) The company added 2 new logos: in the Medical segment, focused on battery management systems, and in the Industrial segment, supporting high-precision and electrical motor controls. 4) In Q3FY26, margins were impacted by one-off items, including M&Arelated expenditure for a transaction that was subsequently cancelled due to certain commercial/strategic terms not working out, as well as the impact of wage code implementation. 5) The B2S segment continues to see strong traction, contributing meaningfully to revenue stability. In FY26, it is expected to contribute 6–7% to the topline, with double-digit contribution from FY27, which should further support margin expansion. 6) Export:domestic ratio stood at 86:14 in Q3FY26 vs. 61:39 in Q3FY25. 7) CYIENTDL continues to strengthen its growth platform by expanding and reinforcing its sales teams in India and overseas. 8) The company is deepening its engagement with existing customers, increasingly participating earlier in the design cycle, with several customers showing interest in re-designs and new product launches. 9) Additionally, several anchor customers are co-developing next-generation products, including 2 in Transportation and 1 each in Industrial and Defense, with revenue contribution expected to commence in the next 2 years, supported by higher volumes and healthy gross margins.

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