COMPANIES

No Data Found

NEWS

No Data Found
Advertisement
Cyient DLM: Kotak retains 'Reduce' rating, shares target price

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.

Business Today Desk
Business Today Desk
  • Updated Apr 23, 2025 11:25 AM IST
Cyient DLM: Kotak retains 'Reduce' rating, shares target priceYES Bank share price: Kotak Institutional Equities has given a 'Sell' call for the stock.
SUMMARY
  • Kotak cuts Cyient DLM FY2026 estimates by 8% due to weak growth
  • Q4 profit misses expectations, affected by BEL contract ramp-down
  • 10th consecutive quarter of order book decline raises concerns

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.

Advertisement

Related Articles

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.

Advertisement

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.

Disclaimer: Business Today provides stock market news for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.
Published on: Apr 23, 2025 11:25 AM IST
    Post a comment0