Accumulate Cyient Ltd for the Target Rs. 478 By Prabhudas Liladhar Capital Ltd
B2S traction to drive growth
In Q2FY26, CYIENTDL’s margins expanded by ~190bps, driven by higher contribution from the Box-to-Build segment (25% vs 15% in Q2FY25) and a decline in the share of the lower margin Defense segment. The company remains confident of achieving an EBITDA margin above 10% for FY26 and expects book to build ratio of 1.5x. In Q2FY26, the company added two new clients: a Japanese company manufacturing EVOTL vehicles and an EV charging company. The Build-to-Specification(B2S) segment contributes 20% to the order backlog, and the share is likely to increase in the future. For FY26, the company expects growth to be driven by the Aerospace, Industrial and MedTech segments, with a double-digit margin. We cut our earnings estimates by 2.2%/0.5% for FY27/FY28E mainly due to decline in revenues. We have revised TP to Rs478 (Rs485 earlier), based on 25x Sep’27 earnings and maintain our recommendation to ‘Accumulate’. We estimate FY25-28E revenue/EBITDA/PAT CAGR of 20.7%/27.7%/33.8%, with EBITDA margin expanding by ~170bps.
Revenue declines by 20.2%, adj PAT surges by 108%: Sales declined by 20.2% YoY to Rs3.1bn (PLe: Rs4.5bn). Aerospace/Industrial/MedTech/Railway segment grew by 48%/242%/113%/618% YoY and Defense declined by 90% YoY due to large order completion in Q1FY26. Aerospace/Industrial/MedTech segment contributed 37%/30%/16% to Q2FY26 revenue. EBITDA declined by 1.4% YoY to Rs312mn (PLe: Rs381mn). EBITDA margin expanded by ~190bps to 10.0% (PLe: 8.5%). PBT grew by 74.6% YoY to Rs365mn (PLe: Rs225mn), driven by higher other income, following the reversal of an earnout related to a past acquisition where performance conditions were not met. Adj PAT surged by 108% YoY to Rs321mn (PLe: Rs169mn). Order book stood at Rs22.9bn.
Con call highlights: 1) CYIENTDL is targeting a 30% CAGR in topline over the next 5 years, supported by double-digit margins and a healthy book-to-bill ratio of 1.5x in FY26. The company expects revenue momentum to accelerate from Q4FY26. 2) In Q2FY26, the company added two new logos: a Japanese EVOTL vehicle manufacturing company and an EV charging company. 3) A Japanese Electric Vertical Take-Off and Landing (EVTOL) company, focused on the future of mobility, is in the development phase and is expected to reach mass production stage in the coming years. 4) CYIENTDL has onboarded another logo in the automotive space—an India-based firm specializing in EV charging solutions. 5) CYIENTDL’s B2S segment continues to gain strong traction, contributing meaningfully to revenue stability. After 4–5 years of sustained investments, the company is now witnessing visible revenue scaling driven by IP-led product development. 6) In Q2FY26, CYIENTDL secured orders from two key customers under the B2S segment, further validating its strategy. The overall order book stood at Rs22.9bn, with the B2S segment contributing around 20%. 7) The company faced temporary disruptions in Israel, an important geography, due to geopolitical tensions, which impacted both the revenue quantum and creditability of receivables. However, with conditions expected to stabilize, the region is likely to support overall business stability going forward. 8) Export to domestic ratio stood at 86:14 in Q2FY26 vs 46:54 in Q2FY25. 9) CYIENTDL is actively expanding its non–A&D portfolio, focusing on Industrial, Medical, Rail, Automotive, and EV segments. The company continues to explore inorganic opportunities across NAM and EMEA regions to optimize client proximity and enhance capabilities.
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