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Diversification into New Verticals to Drive Growth

CYIENTDL delivered a steady performance in Q2FY27, with revenue growing 26.5% YoY, led by strong growth in aerospace and industrial segments, while EBITDA margins contracted by ~130bps YoY to 8.7%, primarily due to higher sales and marketing expenses and continued product-development investments. Management expects H2FY27 revenue growth of 30%+ and EBITDA margins of 9–10% in FY27, improving to 11%+ in FY28, supported by operating leverage. The company has added three new customer logos in Q2FY27. CYIENTDL follows a three-stage strategy of Strengthen, Expand and Transform—deepening its core segments, expanding into AI Data Centres and Robotics during FY27–29, and transitioning towards product-, platform- and IP-led offerings beyond FY30, with margins targeted to improve from ~9–11% currently to ~13–18% over the long term. We estimate FY26-28E revenue/EBITDA/PAT CAGR of 30.9%/35.7%/25.1%, with EBITDA margin expansion of ~110bps. We tweak our earnings estimates for FY28/FY29E. Maintained our ‘REDUCE’ rating with a TP of INR 873 (INR 878 earlier), based on 45x Sept’28 earnings.

Q2FY27 financial performance:

Revenues grew by 26.5% YoY at INR 3.9bn (in-line with PL est). Aerospace/Industrial Segment grew by 61%/31% YoY, which contributes 47%/31% to the topline in Q2FY27. EBITDA grew by 9.5% YoY to INR 342mn (PLe: INR 411mn). EBITDA margins contracted by ~130bps to 8.7% (PLe: 10.4%). PBT grew by 7.8% YoY to INR 393mn (PLe: INR 264mn), primarily driven by an exceptional gain of INR 181.95mn from the fair valuation of earnout liability. PAT grew by 5.8% YoY to INR 340mn (PLe: INR 207mn). The company is having an orderbook of INR 28bn in Q2FY27 vs INR 23bn in Q2FY26

H1FY27 financial performance:

Revenues grew by 30.2% YoY at INR 7.7bn. Aerospace/Industrial Segment grew by 51%/54% YoY, which contributes 45%/31% to the topline in H2FY27. EBITDA grew by 30.4% YoY to INR 733mn. EBITDA margins remained flat at 9.6%. PBT grew by 60.5% YoY to INR 433mn, includes an exceptional gain of INR 181.95 mn from the fair valuation of earnout liability reported in Q2FY27. PAT grew by 27.0% YoY to INR 503mn.

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