IGI Logo

We have analysed Cyient’s FY25 annual report and key takeaways are:

* The global economic landscape in FY25 was shaped by a complex interplay of persistent macroeconomic challenges and moderate resilience.

* Within this macroeconomic context, Cyient’s DET segment encountered considerable in-year headwinds across several business units, which translated into a subdued revenue performance and consequently into an impact on in-year profitability.

* As the company looks forward to FY26E, Cyient DET maintains a cautious yet optimistic outlook. Further, Cyient’s FY26 priorities include: (i) deepening client engagement in key verticals through co-innovation, (ii) expanding investments in AI, software defined products, and cloud native engineering, (iii) strengthening global delivery and talent capabilities to support long-term scalability. During 4QFY25 earnings call, Cyient mentioned that DET revenue growth to remain soft even in 1HFY26E.

* Within ER&D space, Cyient expects Investment activity to remain strong in high-impact technology areas such as Digital Engineering, AI and Industry 4.0 frameworks targeted towards the convergence of operational technology and information technology domains.

* In FY25, Consol US$ revenues grew by 0.8%. Cyient DET’s US$ revenue registered a decline of 3.7% (down 3% yoy in CC terms) while DLM business grew by 24.7% (aided by inorganic growth as well). Within Cyient DET Transportation, Connectivity and Sustainability declined by 4.6%/6.8%/3.5% while new growth areas grew by 7.1% in CC terms. Among market, Cyient DET revenue (in US$ terms) grew by 8.3% in the Americas region while EMEA and APAC de-grew 14.8%/9.0% respectively.

* Consolidated EBIT margin declined by 249bps yoy in FY25 to 12.0% led by decrease in Services EBIT margin to 13.5% in FY25 vs. 16.1% in FY24) due to decline in revenue and increase in SG&A cost in DET segment.

* Consolidated Employee benefit expenses increased by 5.1% in FY24 largely due to wage hike, higher ESOP cost and staff welfare expenses. Services headcount decreased by 1310 to 15,151 and Services revenue per average headcount decreased yoy by 0.3% at US$ 46,454.

* Total debt decreased to Rs.2,138mn in FY25 vs. Rs.4,526mn in FY24.

* Cash and bank balances stood at Rs.13,142mn (vs. Rs.9,835mn in FY24) while current investments stood at Rs.3,172mn (comprising quoted bonds and mutual funds) vs. 2,843 investments at FY24-end.

* Cash generation for Cyient continues to remain healthy in FY25 with operating cash flow (OCF) of Rs.7,899mn (5-year CAGR of OCF being 6%). OCF to EBITDA conversion stood at 69% in FY25 (vs. 56% in FY24). Free cash flow (net of maintenance capex and acquisitions) for FY25 stood at Rs.4,016mn which translates into conversion of 65% of PAT (vs. 71% of PAT in FY24).

* Cyient paid Rs.26/share as dividend in FY25 (vs. Rs.30/Rs.26/share in FY24/FY23).

* During 4QFY25 (On 23rd Jan’25) Mr. Karthikeyan Natarajan (Executive Director and CEO) of Cyient Limited has resigned. Further on 19th Feb’25 Mr. Sukamal Banerjee has been appointed as Executive Director and CEO of its DET business.

ER&D Industry outlook and Cyient:

* The ER&D industry is projected to grow at a steady pace of approximately 4–5% in FY26. Cyient believes that the primary growth impetus in the year ahead will stem from the deepening integration of digital technologies across product development and operational ecosystems.

* Cyient expects Investment activity to remain strong in high-impact technology areas such as Digital Engineering, AI and Industry 4.0 frameworks targeted towards the convergence of operational technology and information technology domains.

* The global economic landscape in FY25 was shaped by a complex interplay of persistent macroeconomic challenges and moderate resilience.

* Within this macroeconomic context, Cyient’s DET segment encountered considerable in-year headwinds across several business units, which translated into a subdued revenue performance and consequently into an impact on in-year profitability.

* As the company looks forward to FY26, Cyient DET maintains a cautious yet optimistic outlook. Further, the company’s FY26 priorities include:

* Deepening client engagement in key verticals through co-innovation.

* Expanding investments in AI, software defined products, and cloud native engineering.

* Strengthening global delivery and talent capabilities to support long-term scalability.

Key Takeaways from MD’s message

* Cyient’s purpose—Designing Tomorrow Together continues to guide them, reflecting its collaborative approach to building intelligent products, plants, and networks that power a better and sustainable future. This mission is grounded in five core megatrends that shape its strategy: Smart Operations, Digital Healthcare, Intelligent Mobility, Sustainability, and Space Systems.

* Several notable developments have further reinforced Cyient’s position in the global engineering landscape. At a Group level, there are 3 strategic themes that are highlighted: 1.Unprecedented Revenue Growth and Momentum. 2.A Balanced, Diversified Business and Industry portfolio (with two distinct growth paths):

* Cyient DET: Focused on engineering services and technology-led transformation.

* Cyient DLM: Advancing opportunities through engineering-driven manufacturing. 3.Global Footprint, Local Strength.

* Cyient sees the current world order as a matrix of interconnected yet distinct geopolitical and economic systems. Their balanced approach enables them to navigate this complexity with confidence and purpose.

* While FY25 presented headwinds, especially in demand volatility, their customer relationships remain robust.

Key Takeaways from CEO’s message

* As per Cyient, its DET order intake was significantly higher in the second half of the year and continues to show improvement into FY 26. In semiconductor and connectivity, Cyient won key deals for AI chip design for data center and automotive applications, and for low-power adaptive electromyography sensing chips.

* In FY25, cyient continued to build platforms, accelerators, and solutions embedded with GenAI, ML, and advanced analytics, strengthening its position as a leader in next-gen digital engineering.

* In FY25, Cyient also launched Cyient Semiconductor as a standalone subsidiary, marking a significant milestone in their growth strategy.

* Looking towards FY26 as per Cyient, the global ER&D services market presents a cautiously optimistic landscape. While enterprises are expected to increase their ER&D budgets, there are macro uncertainty overhangs from global trade actions. The focus is clearly shifting from expansion to optimization.

Key trends that Cyient expects to shape next year include:

* North America is expected to lead the recovery in ER&D services, providing strong growth momentum. Despite prevailing headwinds in Europe, the market is projected to grow steadily at 7–8%.

* Vertical-specific growth will continue, with notable traction in semiconductor, internet and ISV, defense, healthcare & life sciences, and industrial products. These sectors are poised to benefit from heightened demand for innovation, supply chain resilience, and digital transformation.

Business segments updates from MD&A

Transportation

* The commercial aerospace sector continues its post- pandemic recovery trajectory in 2024 as well. Cyient expects the traffic to grow at a healthy rate of 8% in 2025 re-emphasizing the realism in the aircraft orders placed with OEMs in the recent past.

* The aircraft OEMs continue to focus on addressing delivery backlogs, while MRO providers scale operations to support expanding fleets. Simultaneously, the defence segment is experiencing a marked uptick in investment, driven largely by heightened geopolitical uncertainties that are reshaping national security priorities across multiple regions.

* Despite this momentum, the industry continues to grapple with persistent challenges, including supply chain disruptions, skilled workforce shortages, and extended lead times.

* Moving into FY26, Cyient’s growth strategy for commercial and defense aerospace sector will pivot on accelerating digital transformation initiatives, driving product innovation, B2S and expanding aftermarket services.

Sustainability

* Throughout FY25, global momentum toward energy transition remained strong, with governments, industries, and communities aligning their efforts to meet ambitious climate objectives including the goal of tripling global clean energy capacity by 2030. This paradigm shift has sustained significant investment in areas such as grid modernization, digital infrastructure, electrification, and the integration of renewable energy sources into traditional energy systems.

* Cyient expects the global energy demand to increase by 20- 30% by 2035 driven primarily by the growth in electricity consumption across the spurt in data centres, EVs and green hydrogen generation.

Connectivity

* In FY25, the communications sector continued to face the challenges from the sudden spike in capital interest rates, that constrained capital expenditure across critical infrastructure areas including fiber optics, wireless technologies, 5G networks, and private telecommunications systems.

* Cyient expects large-scale government programs such as the Broadband Equity, Access, and Deployment (BEAD) and Rural Digital Opportunity Fund (RDOF) initiatives to catalyse infrastructure development, particularly in underserved and rural regions across the United States.

* Although FY25 showed early signs of recovery following a challenging FY24, growth in the latter half of the year was dampened by renewed geopolitical tensions and macroeconomic uncertainty, particularly affecting performance in the third and fourth quarters.

New Growth Areas

Semiconductors

* Despite the cyclical challenges faced by the semiconductor industry in FY25, Cyient’s strategic commitment to this high growth sector remains resolute.

* According to Cyient given the significant potential of the semiconductor space which is projected to become a $1 trillion global industry by 2030, it took a decisive step forward by establishing Cyient Semiconductors Private Limited as a standalone subsidiary.

* Cyient Semiconductors is structured to capture emerging opportunities across the value chain, focusing on the development of turnkey ASIC solutions tailored to fast evolving sectors such as high-performance computing, AI, Industry 4.0, robotics, communications, healthcare, and automotive.

Automotive

* While the global automotive industry experienced a general slowdown in FY25, Cyient’s automotive business achieved steady growth, given its differentiated and power-train agnostic offerings focussed on software defined vehicles.

* Looking ahead, Cyient anticipates continued momentum in this sector, driven by increasing EV adoption, the rise of software-defined vehicles, and the growing emphasis on connected mobility solutions.

Healthcare and Life Sciences

* FY25 marked a significant transformation in Cyient’s healthcare and life sciences business, with the organization reorienting its core offerings into 3 strategic pillars: Product to Platform, Legacy Product Modernization & Enterprise Solutions, and QARA Acceleration.

* All 3 pillars experienced strong growth during the year, as clients responded to the increasing complexity of healthcare technologies, the surge in smart medical device adoption, and the demand for greater digital integration.

* Looking ahead to FY26, Cyient expects this momentum to continue, fuelled by rising global healthcare needs, expanding digital health ecosystems, and ongoing innovation in patient centric technologies.

Above views are of the author and not of the website kindly read disclaimer