Buy Cyient DLM; target of Rs 512: Deven Choksey

Deven Choksey's research report on Cyient DLM

Cyient DLM’s Q1FY26 performance was a sharp miss to our estimates, led by a decline in defense segment, driven by completion of a order from a large customer last year. The miss was across the board with revenue, EBITDA and net profit stood below our estimates. Q1FY26 revenue grew marginally by 8.0% YoY (-35.0% QoQ) to INR 2,784 Mn., despite in-organic revenue (i.e., from Altek’s acquisition) being absent in Q1FY25. The revenue stood sharply below our estimates (-16.9%), led by a sharp decline in the defence segment, following the completion of a large order in FY25. Additionally, geopolitical tensions in the Middle East (Israel-Iran conflict) disrupted supply chains, impacting deliveries and top-line execution.

Outlook

We have roll forwarded our valuation basis to Jun’27 estimates. We value Cyient DLM at 28.0x June-27 EPS, implying a target price of INR 512. We reiterate our “BUY” rating on the stock.