Shares of Cyient DLM Ltd. fell as much as 17% on Friday, October 16, in response to the company’s second quarter results, that were reported after market hours on Thursday.
Cyient DLM reported strong 27% revenue growth during the quarter from last year, led by growth in the aerospace and industrial business.
However, the company’s margins took a hit, with EBITDA margin declined 130 basis points from last year to 8.7%, while gross margins fell even more, declining 400 basis points from last year to 37.4%.
Net profit reported by the company also includes a one-time earnings payout reversal gain of ₹18.2 crore.
Cyient DLM’s order book though, hit a record high of ₹2,814 crore, showing a growth of 23% from last year. The order book is likely to be executed in the next 18 to 24 months. Net Working Capital days have also increased to 154 from 138 earlier.
During its earnings call, the company’s management held on to its financial year 2027 guidance of 30% to 35% revenue growth and EBITDA margin to range between 8% to 9%. The management is hopeful of returning to double-digit margins from financial year 2028, while it has set a long-term margin goal of 13% to 18% by financial year 2030.
Cyient DLM’s management attributed the current margin pressure to investment in sales, R&D and marketing, most of which is now complete.
Brokerage firm Antique Stock Broking has downgraded Cyient DLM after its announcement to “hold” from its earlier rating of “buy” but maintained its target at around ₹1,025 apiece. Kotak too, has a “sell” recommendation on the stock and they have ascribed a price target of ₹790.
13 analysts have coverage on Cyient DLM, of which, eight have a “buy” rating, one has a “hold” rating, while four have a “sell” recommendation on the stock.
Shares of Cyient DLM are trading 16.5% lower on Friday in response to its results at ₹860.95. The stock is down 19% from its 52-week high and despite the fall on Friday, the stock is up 105% so far for the year so far.