Cyient DLM Limited is an established entity in the Electronics Manufacturing Services (EMS) industry, specializing in providing comprehensive solutions throughout the entire product lifecycle. The company operates from key locations in India, including Mysore and Hyderabad, serving a global client base. Cyient DLM's core business involves collaborating with clients on design, manufacturing, testing, and certification processes, ultimately delivering fully integrated electronic and mechanical systems. The company's expertise spans critical, high-reliability sectors such as Aerospace, Defense, Medical Technology, and Industrial applications. By focusing on these demanding markets, Cyient DLM has positioned itself as a provider of high-complexity, low-to-medium volume solutions, distinguishing itself from high-volume consumer electronics manufacturers. Their service offerings range from Printed Circuit Board Assemblies (PCBA) and cable harnesses to complex box builds, which are complete system integrations. This integrated approach allows them to act as a strategic partner for clients seeking reliable, high-quality manufacturing and supply chain management for their mission-critical products.

Official Website: http://www.cyientdlm.com/

• Revenue Performance: Revenue for Q3 FY26 stood at ₹3,033 million, a significant year-over-year (YoY) decline of 31.7% from ₹4,442 million in Q3 FY25. This downturn is directly attributed to the completion of a large, high-value order in the defense segment during the previous fiscal year.

• Profitability Metrics: Despite the revenue contraction, the company demonstrated strong operational control.

• Normalized EBITDA: Stood at ₹309 million, compared to ₹361 million in Q3 FY25. The Normalized EBITDA margin improved by 207 basis points YoY, reaching 10.2%. Normalization adjusts for one-off M&A costs of ₹17.75 million and a wage code impact of ₹16.43 million.

• Reported EBITDA: Was ₹275 million, with a margin of 9.1%, an improvement of 277 basis points YoY.

• Normalized Profit After Tax (PAT): Came in at ₹138 million, down from ₹170 million YoY. However, the Normalized PAT margin expanded by 73 basis points to 4.6%.

• Reported Profit After Tax (PAT): Showed a slight YoY growth of 1.9%, reaching ₹112 million. The reported PAT margin was 3.7%.

• Cost Management:

• Material Cost: Decreased by 46.2% YoY, in line with the lower revenue.

• Finance Cost: Reduced by 39.2% YoY to ₹61 million, reflecting a lower interest rate environment and reduced working capital loans.

• Working Capital: The Net Working Capital (NWC) days stood at 160 for the quarter. Key components include Days Sales Outstanding (DSO) at 76 days, Days Inventory Outstanding (DIO) at 195 days, and Days Payables Outstanding (DPO) at 83 days.

Despite a substantial revenue decline caused by the conclusion of a major defense contract, the company effectively managed costs and improved its product mix, leading to a notable expansion in its year-over-year profitability margins.

• Key Macro Trends: The EMS industry is being driven by several powerful global trends. These include the increasing "electronification" and digitization across all sectors, rising defense spending globally, and geopolitical shifts that are leading to a realignment of global supply chains.

• Technology Drivers: The rapid growth in Artificial Intelligence (AI) and the build-out of AI-related infrastructure are creating new demand for sophisticated electronic components and systems.

• Domestic Market: The Indian market presents a significant opportunity, fueled by increased government spending in key areas such as defense and railways.

The company is operating in a favorable macro environment characterized by strong secular tailwinds, including supply chain diversification, increased defense and AI-related spending, and robust domestic demand.

• Order Book and Intake: The company's order book remains robust, expanding to ₹23,494 million in Q3 FY26. This was driven by a strong order intake of approximately ₹3,871 million during the quarter, indicating healthy future revenue visibility.

• Customer Diversification: Management is actively diversifying its customer base by securing two new clients:

1. A medical sector client for Battery Management Systems used in medical infrastructure.

2. An industrial sector client for high-precision electrical motors.

• Segment Performance: While the defense segment saw an 86% YoY de-growth due to the large order completion, other segments are performing well. The Aerospace segment grew 13% YoY, and focused efforts in the Industrial and Med-Tech segments have resulted in strong YoY growth.

• Geographic Mix: The business continues to be dominated by international markets, with the Rest of the World (ROW) contributing 93% of revenue. The India business, currently at 7%, is noted as a growing segment.

• Product Mix Evolution: The company is successfully moving up the value chain. The share of Box Builds (fully assembled systems) increased to 31% of revenue in Q3 FY26, up from 23% in the same quarter last year.

Growth is being driven by a strong and expanding order book, successful customer and vertical diversification, and a strategic shift towards higher-value box build solutions.

• Inorganic Growth: The company has clearly identified inorganic expansion as a key strategic pillar. It is actively looking to strengthen its presence in Europe through acquisitions.

• Global Defense Market: There is a focused effort to "double down" on the global defense business. This involves establishing a local presence in key markets and obtaining the necessary certifications to compete for international contracts.

• Capability Enhancement: Management plans to strengthen its capability stack through acquisitions in complementary areas like cables and sheet metal fabrication.

• Build to Spec (B2S) and Platform Play: The company has commenced revenue realization from its B2S initiatives and sees a clear path for significant scale-up. It is investing in people, capabilities, and technology platforms to drive this high-value business model.

The primary opportunities lie in strategic European acquisitions, deepening penetration of the global defense market, and scaling the higher-margin Build to Spec (B2S) business.

• IPO Proceeds for Capex: The company allocated ₹436 million from its IPO proceeds for capital expenditure.

• Current Utilization of Funds: As of December 2025, only ₹67 million, or 15.4% of the allocated amount, has been utilized for this purpose.

The company has significant dry powder from its IPO proceeds earmarked for capital expenditure, suggesting that funding for future expansion is readily available.

• Go-To-Market Strategy: The company is strengthening its sales teams in key international markets and building cross-functional teams to acquire new customers and build a pipeline of large deals.

• Operational Excellence: The focus is on enhancing key operational metrics through increased automation and digitization. This includes investments in technology to improve traceability, quality, and overall efficiency.

• B2S and Platform Investment: A core part of the future strategy is to invest heavily in the B2S roadmap. This includes hiring specialized talent, setting up New Product Introduction (NPI) capabilities, and investing in key technology platforms.

The company's future plans are centered on strengthening its sales engine, driving operational efficiency through technology, and making strategic investments to scale its high-value B2S business.

• Margin Expansion: Normalized EBITDA margin improved to 10.2% in Q3 FY26 from 8.1% in Q3 FY25. Similarly, the Normalized PAT margin increased to 4.6% from 3.8% over the same period.

• Drivers of Improvement: The margin improvement is attributed to three key factors:

1. Better Mix: A more favorable mix of products and services, including a higher contribution from value-added box builds.

2. Supply Chain Improvement: More efficient management of the supply chain.

3. Operational Efficiency: Strong cost management and operational resilience, which allowed the company to maintain double-digit EBITDA margins despite a soft revenue quarter.

The company has successfully expanded its profitability margins year-over-year by improving its revenue mix and maintaining strong operational and supply chain discipline.

• Customer Concentration: The significant 31.7% YoY drop in quarterly revenue, attributed to the completion of a single large defense order, highlights a potential risk related to customer or project concentration. A substantial portion of revenue can be tied to a few large-scale projects.

The primary observable risk is revenue volatility stemming from the timing and completion of large, individual contracts, which can create significant quarter-over-quarter fluctuations.

• Industry Recognition: The company was recognized as the "Best Performer – Electronic Hardware Exports" by the Software Technologies Parks of India for FY24-25. It also received a "Risk Mitigation Award" from an aerospace customer for reliable program delivery.

• IPO Proceeds Utilization: As of December 2025, the company has utilized 93.2% (₹6,180 million out of ₹6,632 million) of its total IPO proceeds. The funds for debt repayment (100%), acquisitions (100%), and general corporate purposes (100%) are fully accounted for, while working capital is 97.2% utilized.

The company continues to gain industry recognition for its performance and has effectively deployed the capital raised from its initial public offering toward its stated objectives.