Cyient DLM: Shares Tumble 12% on Weak Quarterly Performance
Shares of Cyient DLM dropped sharply by 12% on January 22 after the company reported a significant dip in its net profit and margins for the December quarter. By 9:35 AM, the stock was trading 10% lower at ₹533. Over the past year, Cyient DLM’s stock has fallen by 18%, underperforming the Nifty 50, which saw only a 3% decline in the same period.
The company’s net profit for the December quarter fell nearly 30% sequentially and 40% year-on-year to ₹11 crore. Additionally, its EBITDA margin shrank to 8.1%, compared to 9.2% in the same quarter last year.
The higher employee costs and other expenses were attributed to the consolidation of Altek Electronics, Inc., a U.S.-based electronics manufacturing services company specializing in PCB assemblies, box builds, and cable harnesses.
On the brighter side, Cyient DLM’s revenue from operations showed strong growth, rising to ₹444.2 crore in Q3FY25, up from ₹321 crore a year ago and ₹389.4 crore in the previous quarter. The company’s EBITDA also improved to ₹35.9 crore compared to ₹29.4 crore in Q3FY24 and ₹31.6 crore in the prior quarter.
Analyst Take
Despite the challenges, Motilal Oswal Financial Services maintained a ‘Buy’ rating on the stock but revised its price target downward to ₹7,500–₹8,000. The brokerage also reduced its earnings estimates for FY25, FY26, and FY27 by 3%, 4%, and 5%, respectively, citing a slower-than-expected pickup in inflows. Additionally, it adjusted the valuation multiple from 70x to 65x on two-year forward earnings to reflect the tempered outlook for Cyient DLM.
Company Snapshot
Cyient DLM specializes in designing, testing, and manufacturing electronic systems and components for industries like aerospace, defense, and other high-tech engineering sectors. The company serves clients globally, with a presence in India, Europe, North America, China, and Japan.
Despite its operational growth, Cyient DLM faces challenges in maintaining profitability, which has impacted investor sentiment. With its focus on expanding into key markets and leveraging its capabilities in electronic systems, Cyient DLM remains a significant player in the electronics manufacturing space, although it must address its margin pressures to regain investor confidence.
