Target: ₹416
CMP: ₹362.25
Cyient DLM reported Q3-FY26 revenue of ₹303.30 crore (-31.7 per cent y-o-y), below our estimates largely due to the completion of a large order in the base quarter. Segment-wise contribution stood at Aerospace/Defence/Medical Technology/Industrials at 37/8/16/30 per cent, respectively.
Aerospace and Industrials grew 14.8 per cent and 57.6 per cent y-o-y, respectively, while Defence and Medical Technology declined sharply by 88.1 per cent and 39.3 per cent y-o-y. The margin-accretive cables segment grew 36.6 per cent y-o-y, whereas PCBA and box-build contribution declined to 51.0 per cent and 25.8 per cent, respectively.
We expect Cyient DLM to deliver a gradual recovery in revenues from Q4FY26 onwards, supported by a strong order book, healthy book-to-bill ratio, and execution of deferred shipments, with FY27E likely to be materially stronger than FY26. We expect margins to remain in double digits and trend higher, driven by operating leverage as volumes scale, a structurally healthier product and industry mix, and rising contribution from B2S programmes.
We expect Revenue/EBITDA/PAT to grow at a CAGR of 10.6/13.7/19.1 per cent, respectively, over FY25-FY28. We value the stock at a P/E multiple of 26x on FY28E EPS and maintain our Buy rating with a revised target price of ₹416, supported by improving earnings visibility and a strengthening margin profile.