Target: ₹700
CMP: ₹515.70
Cyient DLM reported a consolidated revenue/EBITDA growth of about 38/23 per cent year-on-year in Q3-FY25. However, EBITDA fell short of expectations as margins declined by 90 basis points year-on-year due to a high mix of low-margin business from the execution of BEL orders. Standalone revenue, excluding the recently acquired Altek, only grew by around 11% in Q3-FY25.
The company is maintaining its guidance of a 30% revenue CAGR over the next three to five years. However, FY26 consolidated revenue growth is expected to be in the mid-teens due to the absence of BEL orders. EBITDA margins are projected to remain flat in FY25, with margin expansion anticipated after the first half of FY26.
Despite facing pressure on its order book, Cyient DLM expects strong traction in the North American markets in the future. The company foresees a slowdown in growth momentum in the near term due to the lack of BEL orders and delays in order flows from existing and new clients. However, the integration of Altek is expected to drive healthy financial performance through synergy benefits and industry tailwinds.
Looking ahead, the conversion of orders from new clients acquired in recent quarters and ongoing discussions with major global customers are likely to enhance growth visibility in the medium to long term.
(Source: The Hindu Business Line, published on January 22, 2025)
