Cyient DLM Q3 Results Review - Growth Uninterrupted; Another Strong Quarter: Motilal Oswal

Motilal Oswal Report

Cyient DLM Ltd. reported another strong quarter with a revenue growth of ~50% YoY in Q3 FY24, led by significant traction from the aerospace and defense verticals. However, margins declined 40 basis points YoY to 9.2%, primarily due to higher selling, general and administration expenses.

Valuation and view

Cyient DLM, being an integrated electronic manufacturing services and solutions provider in the rapidly growing critical end-user industries, is likely to capture its share of the pie on the back of its strong core competencies and high technical capabilities.

Going ahead, we expect Cyient DLM to sustain its growth momentum, aided by:

1. strong order book, coupled with healthy order inflows;

2. high customer stickiness; and

3. strong promoter heritage.

We estimate Cyient DLM to report a compound annual growth rate of 41%/44%/ 81% in revenue/Ebitda/adjusted profit after tax over FY23-26. 

We maintain our FY24/FY25/FY26 earnings per share estimates and retain our 'Buy' rating on the stock with a target price of Rs 830 (35 times FY26 EPS).

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