'9th quarter of fall': Why Cyient DLM stock bled 12% today, target prices 

Cyient DLM Ltd shares took a beating, falling 12 per cent in Wednesday's trade, as Q2 was a slow quarter for the IT firm, with revenue growth ex-Altek, the recent acquisition, was muted at 11 per cent and adjusted profit after tax declined 12 per cent YoY. 

"Concerns over the order book persisted, with the consolidated order book declining 7 per cent YoY to Rs 2,120 crore, driven primarily by accelerated execution of a low-margin order, while order inflows also remained weak, JM Financial said.

Among the positives, JM said there could be an improvement in Ebitda margin starting Q4, as a low-margin defence order is likely to be completed, and guidance of 30 per cent revenue CAGR over FY24-27 remains unchanged. This brokerage maintained 'Buy' on the stock with a target price of Rs 740. 

Cyient DLM shares fell 12.48 per cent to hit a low of Rs 522 on BSE. The stock is down 32 per cent in the past one year. Kotak Institutional Equities said Cyient DLM reported an adjusted Ebitda of Rs 36 crore, excludes a one-time M&A expense, 10 per cent lower than its expectation. 

"Adjusted PAT came in 27 per cent below expectations on lower margins and higher interest costs. We continue to be concerned about the weak order inflow. This is the ninth straight quarter of order book decline, indicating a weak demand environment for Cyient DLM," Kotak Institutional Equities said.  

It cut its estimates by 12-34 per cent and reduced its fair value on the stock to Rs 560 from Rs 620, as weak margin profile and reducing order book keeps it cautious on the company’s long-term growth prospects.

MOFSL said the growth momentum for Cyient DLM may slow down in the near term due to the lack of BEL orders and a delay in order flows from existing and new clients. The integration of Altek though may drive healthy financial performance due to synergy benefits and industry tailwinds.

"For the medium to long term, the conversion of orders from new clients added over the last few quarters and ongoing discussions with some large global potential customers should boost growth visibility," it said while suggested a target price of Rs 700.