Cyient DLM (CYIENTDL) finds itself in a transitory phase. While international contracts and a growing export pipeline offer promising visibility, a domestic defense vacuum and declining order book have pushed analysts at Prabhudas Lilladher to revise their stance. The brokerage has downgraded the stock from a ‘BUY’ to an ‘ACCUMULATE’ and trimmed the target price to Rs 546 from Rs 692, citing execution challenges and reduced earnings visibility in FY26. This article dissects the quarter’s key results, ongoing structural shifts, and what lies ahead for investors in this electronics manufacturing services (EMS) player.

Q4FY25 Snapshot: Growth in Aerospace and MedTech, Defense Disappointment

In the March quarter, Cyient DLM posted a revenue increase of 18.3% YoY to Rs 4.3 billion, despite a sequential decline of 3.6%.

Aerospace segment revenue surged 56.2% YoY to Rs 1.4 billion, while the MedTech vertical saw explosive growth of 270% YoY to Rs 1.07 billion.

Defense revenue, however, plummeted 43% YoY, largely due to the early conclusion of a key domestic contract.

Rail segment sales also declined by 41% YoY. Overall, Q4 results reflected the company’s heavy dependence on a handful of large contracts—especially in defense—and the risks that come with it.

Margins Expand Despite One-Offs, EBITDA Growth Hits 51%

Cyient DLM reported EBITDA of Rs 574 million, up 51% YoY, with margins rising to 13.4% (vs. 10.5% last year). This included a one-off boost due to favorable material cost adjustments.

Excluding these, adjusted EBITDA margin stood at 10.9%, which still represents a stable double-digit performance.

Profit after tax rose 36.2% YoY to Rs 310 million, with PBT expanding 35.7% YoY to Rs 417 million.

This margin strength offers a silver lining amid topline challenges and suggests that operational efficiency is holding up even when revenue falters.

Order Book Declines 12% YoY; FY26 May Remain Tepid

As of Q4FY25, Cyient DLM’s order book declined to Rs 19 billion from Rs 22 billion YoY, raising concerns over visibility in near-term execution.

The management anticipates a soft Q1FY26, with growth momentum returning only by Q2FY26, once key international contracts kick off.

Export:domestic mix shifted to 71:29 in Q4FY25, up from 66:34 YoY. The company forecasts an aggressive 80:20 export tilt for FY26, signaling a strategic pivot toward global markets.

Strategic Wins: Boeing, Deutsche Aircraft Strengthen Global Playbook

The company secured a new 3-year production contract from Boeing Global Services, set to commence from Q3FY26. Additionally, Cyient DLM has partnered with Deutsche Aircraft to design and manufacture Cabin Management Systems (CMS) for the D328eco® turboprop aircraft.

These high-value international collaborations are expected to:

Diversify customer base

Stabilize order inflows

Improve realization per order, given the premium nature of aerospace clients

The industrial segment also added a new multinational client in Q4FY25, contributing to longer-term de-risking from cyclical verticals like rail and defense.

FY25 Performance and Financial Ratios: Mixed Bag

For the full year FY25:

Revenue grew 27.5% YoY to Rs 15.2 billion

PAT rose 11.2% to Rs 681 million

EBITDA margins stood at 9.0%, compared to 9.3% in FY24

Key ratios and projections:

While profitability metrics are improving, valuation remains elevated—justifying a tempered stance from analysts.

EPS Cut by Over 20%; Downgrade Driven by Execution Risk

Prabhudas Lilladher slashed FY26/FY27 EPS estimates by 23.5% and 21.1%, respectively, citing:

Lack of clarity on the replacement of the BEL defense contract

Ongoing execution challenges in the domestic market

Decline in order intake from Indian government-backed clients

The revised target price of Rs 546 is based on 30x FY27E earnings, reflecting a more conservative growth outlook in the near term.

Export-Led Growth Thesis Holds; Domestic Risks Persist

Management remains optimistic about the export pipeline, with anticipated contributions from Boeing and Deutsche Aircraft. The company is also actively engaging with OEMs who are looking to localize manufacturing to the U.S. in response to reciprocal trade tariffs—a trend that could unlock multiple partnership opportunities for Cyient DLM.

However, domestic growth remains clouded by:

Stalled government defense orders

Component supply chain issues, particularly in EMS sectors

Delayed decision-making from OEMs amid geopolitical uncertainty

Investor Levels and Technical Outlook

Current Market Price: Rs 494

Revised Target Price: Rs 546

Upside Potential: ~10.5%

Support Levels: Rs 465 – Rs 480
Resistance Levels: Rs 525 – Rs 550

Traders can consider entries on dips towards Rs 480, with stop-loss at Rs 450. Long-term investors may consider staggered accumulation in the Rs 460–490 range, betting on the international order book recovery by H2FY26.

Bottomline: Cautious Accumulate, But Global Contracts Could Reignite Momentum

Cyient DLM is entering a period of operational flux—navigating a domestic defense vacuum while betting big on global aerospace and industrial opportunities. While the downgrade to ‘Accumulate’ reflects near-term caution, the company’s ability to maintain double-digit margins and secure long-term international contracts keeps its strategic narrative intact.

Investors must remain patient as Q1FY26 may show further softness. But with execution of Boeing and Deutsche Aircraft orders from H2FY26, Cyient DLM could once again find itself on a stronger growth trajectory.

Rating: ACCUMULATE | CMP: Rs 494 | Target Price: Rs 546 | Horizon: 9–12 months

Disclaimer: Investors are advised to conduct their own due diligence before making investment decisions.