At a Glance
Cyient DLM pivoted from basement-level volumes to ₹1,520 Cr in FY25 revenue, with ₹68 Cr net profit and an 11% ROCE. LVHM electronics for Boeing, Thales, and Deutsche Aircraft power its ₹3,834 Cr market cap, but at 56× P/E, this “boutique” manufacturer trades more like a luxury brand than a contract shop.
1. Introduction with Hook
- Think of Cyient DLM as the bespoke tailors of avionics: low-volume, high-mix, and custom-fitted for each OEM runway.
- FY25 profits hit ₹68 Cr—small enough to fit in a cockpit glovebox—and investors pay 56× those earnings, as if each PCB is hand-stitched in Italian leather.
- Time to don our pilot’s goggles and see if this niche play can actually soar or is just cruising at sub-orbital altitudes.
2. Business Model (WTF Do They Even Do?)
- LVHM Contract Manufacturing: Master Service Agreements (3–5 years) for high-precision PCBs, cable harnesses, and avionics subsystems.
- End Markets: Aerospace & Defense (60%), Medical & Industrial (25%), Telecom & Others (15%).
- Global Footprint: Manufacturing in Bangalore, test labs in Hyderabad, exports to Europe, North America, China, Japan.
- Value Add: Design-integration services—from schematics to flight-qualified hardware certification.
- Stickiness: Multi-year MSAs provide revenue visibility, but low volumes limit scale economies.
3. Financials Overview – Profit, Margins, ROE, Growth
| Metric | FY23 | FY24 | FY25 |
|---|---|---|---|
| Sales (₹ Cr) | 1,192 | 1,520 | 1,520 |
| Net Profit (₹ Cr) | 61 | 68 | 68 |
| OPM (%) | 9% | 9% | 9% |
| ROCE (%) | 14% | 11% | 11% |
| ROE (%) | 7% | 7.3% | 7.3% |
- Revenue Stagnation: Sales jumped to ₹1,520 Cr in FY25 but then plateaued—like a jetliner in steady cruise.
- Profit Consistency: ₹68 Cr profits in both FY24 and FY25—predictable but hardly a supersonic sprint.
- Margins on Autopilot: 9% operating margin is respectable for aerospace, but not enough to clear stratospheric valuations.
4. Valuation – Is It Cheap, Meh, or Crack?
- Current P/E: 56.3× trailing EPS of ₹8.58.
- Price/Book: 4.03× book value of ₹120.
- Fair Value Range:
- Conservative (15–20× P/E): ₹129–₹172
- Growth premium (25–30× P/E): ₹215–₹258
- Rationale Transparency:
- Aerospace-manufacturing peers like Kaynes trade at 136× P/E for niche precision; Honeywell Auto at 68× .
- Cyient DLM’s lower scale suggests fair value resides in the conservative band unless new contracts turbocharge growth.
5. What’s Cooking – News, Triggers, Drama
- Boeing Contract Win: Feb ’25 – precision-machined parts for next-gen cabin management systems.
- Thales MSA Renewal: Long-term avionics manufacturing deal extended through 2028.
- Deutsche Aircraft Partnership: April ’25 – cabin management system co-development, a potential €15 Mn runway.
- Solar Ambitions: Oct ’24 MoU for 500 kWp plant; green power, but solar panels don’t pay your avionics bills.
6. Balance Sheet – How Much Debt, How Many Dreams?
- Total Liabilities: ₹1,694 Cr vs. ₹1,603 Cr – incremental working-capital build for new contracts.
- Borrowings: ₹301 Cr (up from ₹192 Cr) – debt rose to fund Capex for new precision machining lines.
- Reserves: ₹870 Cr – built from retained earnings, cushioning any supply-chain turbulence.
- Net Debt/Equity: ~0.35× – moderate leverage, but watch interest coverage as rates hike.
7. Cash Flow – Sab Number Game Hai
| Activity | FY24 (₹ Cr) | FY25 (₹ Cr) |
|---|---|---|
| Cash from Operations | –71 | –62 |
| Cash from Investing (Capex) | –428 | +127 |
| Cash from Financing | +479 | –59 |
| Net Cash Flow | –19 | +5 |
- Negative OCF: –₹62 Cr means clients pay you slower than you pay vendors—a working-capital black hole.
- Capex Flip: FY24 spent ₹428 Cr on machinery; FY25 saw ₹127 Cr divestments (fixed-asset sales).
- Financing Whiplash: FY24 raised ₹479 Cr in borrowings; FY25 repaid ₹59 Cr—debt gyrations fueling cash flow swings.
8. Ratios – Sexy or Stressy?
| Ratio | FY23 | FY24 | FY25 |
|---|---|---|---|
| Debtor Days | 69 | 83 | 83 |
| Inventory Days | 184 | 188 | 188 |
| Payable Days | 123 | 82 | 82 |
| Cash Conversion Cycle | 131 | 189 | 189 |
- CCC Horror: 189 days to turn inventory & receivables into cash—enough time to build a Mars station.
- Working-Capital Drag: Nearly half-year cash lockup; potential deal-funding risk if contracts delay.
9. P&L Breakdown – Show Me the Money
- Revenue Mix FY25:
- Aerospace & Defense: 60%
- Medical & Industrial: 25%
- Telecom & Others: 15%
- Cost Structure:
- Raw Materials & Sub-contracts: ~60%
- Employee Costs: 15%
- Depreciation: 2%
- Other Overheads: 14%
10. Peer Comparison – Who Else in the Hangar?
| Company | CMP (₹) | P/E | ROCE (%) | Mar Cap (₹ Cr) |
|---|---|---|---|---|
| Kaynes Technology | 5,998 | 136.8 | 14.4 | 40,142 |
| Honeywell Auto | 40,320 | 68.0 | 18.4 | 35,626 |
| Jyoti CNC Automation | 1,015 | 71.5 | 24.4 | 23,083 |
| Cyient DLM | 483 | 56.3 | 11.0 | 3,834 |
- Takeaway: Cyient DLM’s valuation is the lowest P/E quartile among peers, but also the lowest ROCE—value lies in scaling operations or snagging bigger MSAs.
11. Miscellaneous – Shareholding, Promoters
- Promoters: 52.16% (down from 66.66% after stake sale) – anchor still solid.
- FIIs: 2.38% – foreign interest thin but selective.
- DIIs: 28.64% – institutional backing ramped up in FY25.
- Public Float: ~16.8%.
- KMP:
- Ganesh Moorthy – CEO
- Arun Kumar – CFO
12. EduInvesting Verdict™
Cyient DLM crafts mission-critical electronics with artisan care, but it’s priced like a Lamborghini in a Thar market. With a 56× P/E and nearly half-year cash-conversion cycle, this niche player needs blockbuster MSAs or scale breakthroughs to justify its luxury tag. Until then, this stock is more hobby-kit than high-flyer—admire the craftsmanship, but buckle up for turbulence.
✍️ Written by Prashant | 📅 July 12, 2025
Tags: Cyient DLM, Aerospace Manufacturing, Contract Electronics, Stock Analysis, EduInvesting Verdict
