Cyient DLM Ltd (CDLM) is strengthening its credentials as a premier integrated Electronic Manufacturing Services (EMS) provider with a sharp focus on critical engineering solutions across aerospace, defense, medical equipment, and industrial automation. Operating predominantly in the Low Volume High Mix (LVHM) segment—known for superior revenue realizations and profitability compared to High Volume Low Mix (HVLM) categories like mobile phones and consumer electronics—CDLM has positioned itself as a key partner for global clients by offering end-to-end capabilities spanning design, development, and testing. CDLM’s robust client roster, featuring global heavyweights such as Honeywell International, Thales Global Services, ABB Inc., Bharat Electronics, and Molbio Diagnostics, underscores its ability to build long-term, value-driven partnerships with industry leaders.
The company’s acquisition of US-based Altek Electronics marks a strategic pivot to strengthen its foothold in developed markets, particularly in the industrial and medical sectors, where it seeks to deepen its presence. This move aligns with CDLM’s diversification strategy, leveraging Altek’s expertise to unlock growth in high-potential markets.
Additionally, government initiatives such as ‘Atmanirbhar Bharat,’ coupled with supportive policies and incentives, have significantly accelerated the development of a robust domestic electronic manufacturing ecosystem. Moreover, the ‘Make-in-India for the World’ initiative is enhancing India’s footprint in global electronics exports. This push for local manufacturing of electronics and electrical components is benefiting Indian EMS companies, further solidifying their market position.
Over FY21-24, the company’s revenue grew at a CAGR of 23.8% to INR 1192 cr, while the company’s EBITDA and net margins improved by 187bps to 9.2% and 325bps to 5.1% respectively. The management is upbeat about maintaining 30% revenue CAGR in the medium term and confident of achieving double digit EBITDA margin by FY26. Over FY24-27E, the company’s revenue/ EBITDA/ net earnings are expected to grow at a CAGR of 28.8%/ 37.3%/ 47.2% to INR 2,544 cr/ INR 283 cr/ INR 195 cr respectively, while EBITDA and net margins are expected to expand by 196bps to 11.1% and 254bps to 7.7% respectively.
We initiate coverage on CDLM with a BUY rating and a DCF based price target of INR 889 per share (36.1X FY27 P/E), representing an upside of 33.3% from the CMP of INR 676 per share (27.1X FY27 P/E) in the next 18 months.