Cyient DLM: Kotak retains 'Reduce' rating, shares target price
Kotak Institutional Equities projected Cyient's FY2026 revenue growth at 10%, with domestic revenue weaknesses offset by a pickup in exports, supported by the European defence segment.


- Apr 23, 2025,
- Updated Apr 23, 2025 11:25 AM IST
Kotak Institutional Equities has lowered its FY2026 estimates for Cyient DLM by 8% due to weaker topline growth coupled with rising finance costs. This revision follows a continued reduction in the company's order book. Kotak retained its 'Reduce' rating on Cyient DLM, setting a fair value target of Rs 450, which implies 24 times the estimated March 2027 EPS.
Cyient DLM's Q4 profit fell short of expectations, primarily due to weaker-than-expected execution following the ramp-down of the BEL contract, according to Kotak. The brokerage expressed concern over the persistent weak order inflow, marking the tenth consecutive quarter of order book decline. A muted order backlog alongside reduced revenue growth in the domestic market after the BEL order completion is expected to result in a sluggish start to FY2026 for Cyient.
Kotak noted that the ramp-up of orders from new clients and the impact of the Altek acquisition remain key areas to monitor. While the brokerage sees potential for recovery in 2H FY2026, this is contingent on securing new orders and ramping up deliveries from recently onboarded clients.
Cyient's performance across its major export geographies shows mixed trends. The company has significant exposure to European defence firms like Thales, Safran, and BAE, which may see a boost in order inflow due to increased European defence spending. In the US, Cyient expects revenue recovery from Honeywell's Anthem, Micro VCS programme, and ABB, driven by a rebound in the US oil and gas market.
However, domestic market conditions remain challenging. With no major tenders or orders anticipated in the pipeline, Kotak predicts weak domestic market ordering in the first half of FY2026. The BEL order had been a primary revenue driver, and its absence highlights the market's vulnerability.
Kotak projects Cyient's FY2026 revenue growth at 10%, with domestic revenue weaknesses offset by a pickup in exports, supported by the European defence segment, new logo additions, and the Altek acquisition. Nevertheless, the lower-margin BEL order is expected to affect EBITDA margins slightly, estimated at 10.0% and 10.2% for FY2026 and FY2027, respectively.
Overall, Kotak foresees that Cyient's recovery in the latter half of FY2026 hinges on successful new order wins and the effective ramp-up of orders from new clients. This cautious outlook reflects the company's current challenges and future opportunities.
Kotak Institutional Equities has lowered its FY2026 estimates for Cyient DLM by 8% due to weaker topline growth coupled with rising finance costs. This revision follows a continued reduction in the company's order book. Kotak retained its 'Reduce' rating on Cyient DLM, setting a fair value target of Rs 450, which implies 24 times the estimated March 2027 EPS.
Cyient DLM's Q4 profit fell short of expectations, primarily due to weaker-than-expected execution following the ramp-down of the BEL contract, according to Kotak. The brokerage expressed concern over the persistent weak order inflow, marking the tenth consecutive quarter of order book decline. A muted order backlog alongside reduced revenue growth in the domestic market after the BEL order completion is expected to result in a sluggish start to FY2026 for Cyient.
Kotak noted that the ramp-up of orders from new clients and the impact of the Altek acquisition remain key areas to monitor. While the brokerage sees potential for recovery in 2H FY2026, this is contingent on securing new orders and ramping up deliveries from recently onboarded clients.
Cyient's performance across its major export geographies shows mixed trends. The company has significant exposure to European defence firms like Thales, Safran, and BAE, which may see a boost in order inflow due to increased European defence spending. In the US, Cyient expects revenue recovery from Honeywell's Anthem, Micro VCS programme, and ABB, driven by a rebound in the US oil and gas market.
However, domestic market conditions remain challenging. With no major tenders or orders anticipated in the pipeline, Kotak predicts weak domestic market ordering in the first half of FY2026. The BEL order had been a primary revenue driver, and its absence highlights the market's vulnerability.
Kotak projects Cyient's FY2026 revenue growth at 10%, with domestic revenue weaknesses offset by a pickup in exports, supported by the European defence segment, new logo additions, and the Altek acquisition. Nevertheless, the lower-margin BEL order is expected to affect EBITDA margins slightly, estimated at 10.0% and 10.2% for FY2026 and FY2027, respectively.
Overall, Kotak foresees that Cyient's recovery in the latter half of FY2026 hinges on successful new order wins and the effective ramp-up of orders from new clients. This cautious outlook reflects the company's current challenges and future opportunities.