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Cyient underperformed expectations on both revenue and margin fronts. The company’s DET revenue was down 2.1% QoQ (2.4% CC) to USD163.5mn. DET EBITM was flat QoQ at 12.4%. Semiconductor revenue was up 5.4% QoQ, with operational loss of USD3.5mn. The management aspires for mid-to-high singledigit growth (implying ~2.3% CQGR at the lower end) in the DET business in FY27 and 15% EBITM by Q4FY27, with levers including price hikes, automation/AI-led cost efficiency, admin cost rationalization, and forex tailwinds. Strategic units are expected to be close to flat next quarter, with full turnaround over a few quarters. Cyient DLM enters FY27 with its highest-ever order book and book-to-bill at 1.5x; the mgmt has guided to a strong year. Cyient Semiconductor is seeing strong momentum in FY27, and is on track to reach ~USD100mn run-rate with Kinetic, with margin remaining negative owing to investments in the product portfolio and IP and with breakeven expected by end-FY27/early-FY28. Cyient has proposed a buyback of up to 6.4mn shares (~5.8% of equity) at Rs1,125/sh. Factoring in the Q4 performance, we cut FY27/28E EPS by 1.8/1.0%; retain REDUCE and TP of Rs850, valuing the DET business at 12x Mar-28E PER and the DLM business at 20% discount to its CMP.

Results summary

Cyient’s DET revenue was down 2.1% QoQ (2.4% CC) to USD163.5mn, owing to three key customers delaying the start of the program. Semiconductor revenue grew 5.4% QoQ to USD7.2mn. DET and Semiconductor combined revenue came in at USD170.7mn, below our estimate of USD176mn. DET EBITM was flat QoQ at 12.4%, with gross margin expansion offset by investments in leadership capability and forex headwinds from nonINR costs in certain geographies. DET (including semiconductor) EBITM stood at 9.8%, missing our expectation. Net profit was hit by a couple of one-off items, including a Rs278mn impairment of a Tooling business asset and Rs712mn in expenses related to a proposed transaction that did not materialize. Transportation and Mobility grew 4.5% QoQ CC, while Networks and Infra/Strategic Units declined 3.6%/12.4%, respectively. Total headcount was up ~1% QoQ at 14,236. Attrition declined by 140bps QoQ to 14.5%. What we like: Traction in Transportation/Mobility and Americas; buyback. What we do not like: Revenue/EBITM miss; decline in 2 of the 3 business units.

Announces buyback of up to Rs7.2bn + fundraise at semiconductor subsidiary

Cyient has proposed a buyback of up to 6.4mn shares (5.76% of equity capital) through a tender offer at Rs1,125/share, for an aggregate consideration not exceeding Rs7.2bn. Promoters have indicated their intention not to participate in the proposed buyback. The Board has, in principle, agreed to explore a fundraise in the market with a combination of debt and equity, given the growth in the semiconductor business and the working capital needs of the business. The management indicated that initial equity dilution will be capped at 10-12% of equity at the semiconductor subsidiary level. It will help raise the required capital and establish an independent valuation benchmark for the business.

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