Buy Cyient DLM for the Target Rs 800 by Motilal Oswal Financial Services Ltd
Growth momentum returns Operating performance beats estimates
* Cyient DLM’s (CYIENTDL) 1QFY27 consolidated revenue/EBITDA grew 34%/56% YoY to INR3.7b/INR392m, largely aided by 41%/95% YoY growth in aerospace/industrial segments. EBITDA margins expanded by 150bp YoY to 10.5%, led by operating leverage.
* We believe FY27 could mark an inflection year for CYIENTDL owing to order book growth of 22% YoY to INR26b, the ramp-up of aerospace programs (Honeywell and Thales), increasing B2S/box-build contribution, and benefits of operating leverage. These factors should lead to stronger revenue growth and margin expansion. Its expansion into AI data center infrastructure, robotics and semiconductor equipment creates additional growth avenues, strengthening the company's growth visibility.
* Factoring in the strong 1Q performance, we raise our earnings estimates by 5%/7% for FY27E/FY28E and estimate a CAGR of 27%/40%/67% in revenue/EBITDA/ adj. PAT over FY26-28E. We reiterate our BUY rating on the stock with a TP of INR800 (40x FY28E EPS).
Robust growth accompanied by improving margins
* Consol. revenue grew 34% YoY to INR3.7b (est. INR3.5b). Revenue from Aerospace/Defense/Industrial grew 41%/34%/95% YoY, while revenue from Medtech/Auto & others declined 7%/78% YoY.
* The company’s order backlog expanded 22% YoY to INR26b, driven by a strong order intake of ~INR5.6b in 1QFY27 (vs. avg. order intake of INR4.3b in the last eight quarters).
* Though gross margin contracted 230bp to 37.9% due to a change in the product mix, EBITDA margins expanded 150bp YoY to 10.5% (est. 9.6%), driven by better operating leverage. EBITDA grew 56% YoY to INR392m (est. INR338m). Adj. PAT was up 2.2x YoY at INR163m (est. in line).
* NWC as of Jun’26 improved by 4 days YoY to 161 days, led by a reduction in inventory days to 162 (vs. 185 in 1QFY26).
Valuation and view
* CYIENTDL started FY27 on a strong note with a healthy order book, reinforcing confidence in its growth trajectory. We believe the company is entering a multiyear growth phase, supported by a) a ramp-up in aerospace programs (like Honeywell and Thales), b) increasing contributions from higher-margin box-build and B2S offerings, and c) expansion into AI infrastructure, robotics and semiconductor equipment.
* We expect FY27 to mark the beginning of an accelerated earnings growth cycle, supported by operating leverage, an improving product mix and rising contributions from high-value engineering-led programs.
* We estimate a CAGR of 27%/40%/67% in revenue/EBITDA/adj. PAT over FY26- 28E. We reiterate our BUY rating on the stock with a TP of INR800 (40x FY28E EPS).
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