Summary
Cyient Limited - Q3 FY26 Earnings Call Summary Thursday, January 22, 2026, 5:00 PM IST
Event Participants
Executives 3 Krishna Bodanapu (Executive Vice Chairman and MD), Prabhakar Atla (President & CFO), Sukamal Banerjee (Executive Director and CEO)
Analysts 7 Ankur Pant, Dipesh Mehta, Hasmukh, Jyoti Singh, Karan Uppal, Pratik Kulkarni, Sandeep Shah
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| DET Revenue (CC) | $167 million | +1.5% QoQ, -0.7% YoY; Reflects structural stabilization despite seasonal furloughs. |
| DET EBIT Margin (Normalized) | 12.4% | +25 bps QoQ; Driven by operational efficiency and cost optimization, offsetting wage hikes. |
| Group Revenue (INR) | ₹1,822 crores | +3.8% QoQ, -4.0% YoY; YoY decline attributed to specific customer pushouts in DLM. |
| Group PAT (Normalized) | ₹150 crores | +0.7% QoQ, +0.0% YoY; Steady performance despite macroeconomic fluidity. |
| DLM EBITDA Margin | 10.0%+ | +207 bps YoY; Reached double-digit target due to high-value programs and execution. |
| Semiconductor Revenue | - | +10.7% QoQ; Second consecutive quarter of double-digit growth; Order intake +36% YoY. |
| Free Cash Flow (DET) | ₹237 crores | 158% conversion of Normalized PAT; Highest net cash position in 9 quarters at ₹1,434 crores. |
| Headcount (DET) | 16,000+ | +481 net additions; Second consecutive quarter of headcount growth to support momentum. |
Geographic & Segment Commentary
- Transportation and Mobility: Grew 2.9% QoQ, driven by significant volume ramp-ups in commercial aviation MRO and aftermarket services. Management noted strong traction in new aircraft design software and AI-influenced systems.
- Network and Infrastructure: Grew 2.5% QoQ, led by North American connectivity and utility projects. Performance was bolstered by winning back a major APAC-based utility customer from a competitor.
- Strategic Units: Remained flattish at -0.2% QoQ, following several quarters of decline. Management expects a return to growth in Q4 as they focus on large deal conversions in critical sectors.
- DLM (Design-Led Manufacturing): Revenue declined 30% YoY due to tariff uncertainties and customer-specific delays. However, book-to-bill remains above 1.0 for three quarters, indicating a strong recovery pipeline for Q4.
Company-Specific & Strategic Commentary
- Semiconductor Spin-off: Cyient Semiconductor is being positioned as India’s first fabless product company. A definitive agreement to acquire Kinetic Technologies will add 250 products and 100 patents in the power/analog space.
- “Embracing Intelligence”: Launched a new strategic framework focusing on domain-led AI rather than AI-first. Management highlighted that high-value engineering outcomes require at least 14 years of specialized domain knowledge to guide AI inputs.
- SCL Modernization: Secured a strategic role in the ₹4,500 crore modernization of India’s SCL semiconductor fab under MeitY. Cyient is the preferred partner for technology, IP, and design enablement.
- Leadership Expansion: Appointed Harjott Atrii as Chief Business Officer and Bhabesh Acharya as Chief AI Architect. These hires are intended to accelerate GTM in high-growth markets and build differentiation in Data/AI services.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| DET EBIT Margin | 15.0% by Q4 FY27 | Target based on current business mix, scale, and 50%+ offshoring potential. |
| Semiconductor Profitability | EBIT neutral in FY27 | Driven by a $100M+ ASIC pipeline and integration of the Kinetic Technologies acquisition. |
| H2 FY26 Margins | Higher than H1 FY26 | Management expects ongoing cost optimization to outweigh seasonality. |
| DET Growth | “Industry-leading” | Aiming to outperform immediate peer group consistently starting FY27. |
Risks & Constraints
| Risk | Context |
|---|---|
| Macroeconomic Fluidity | Potential for “right-shifting” of projects if global uncertainty extends beyond short-term bursts, impacting deal closure timelines. |
| DLM Volatility | Revenue remains sensitive to customer-specific pushouts and tariff uncertainties, though margins are stabilizing at 10%. |
| Semiconductor Losses | The segment remains loss-making in the short term ($2M-$3M/quarter) as investments in IP and acquisitions scale ahead of revenue. |
| Regulatory Changes | A one-time ₹40 crore provision was taken this quarter due to new Indian labor code compliance regarding gratuity liabilities. |
Q&A Highlights
Aerospace Drivers
- Question: What subsegments are driving Aerospace growth despite furloughs? (Sandeep Shah)
- Answer: Growth is broad-based across MRO, aftermarket services, and new mid-sized aircraft design. AI-influenced programs in manufacturing and documentation are also contributing (Sukamal Banerjee).
Semiconductor Strategy
- Question: Why focus on power semiconductors over high-end AI chips like NVIDIA? (Pratik Kulkarni)
- Answer: Designing AI chips costs ~$1 billion per chip, whereas power chips (180-400nm) cost $5M-$10M. Every AI chip needs a power chip; this is a more sustainable entry point for Cyient (Krishna Bodanapu).
Margin Levers
- Question: What are the primary levers to reach 15% EBIT? (Ankur Pant)
- Answer: Three main levers: revenue momentum, internal/external tech adoption (AI), and monetization of past technology investments. Offshoring (currently <50%) remains a secondary buffer (Prabhakar Atla).
Deal Pipeline
- Question: Is the record funnel resulting in actual signings? (Dipesh Mehta)
- Answer: Pipeline growth is in double digits with a record “large deal” mix. Q3 order intake was robust and higher than the previous year, though large deals have longer conversion cycles (Sukamal Banerjee).
Key Takeaway
Cyient reported a quarter of structural stabilization, with DET revenue growing 1.5% QoQ in constant currency and normalized EBIT margins expanding 25 bps to 12.4%. The company successfully navigated seasonal furloughs and a third tranche of wage hikes, supported by strong performance in Aerospace and Connectivity. Strategically, Cyient is pivoting to “Intelligent Engineering,” prioritizing domain expertise as a prerequisite for AI scalability. The Semiconductor business remains a high-growth focal point with the acquisition of Kinetic Technologies and a $100 million ASIC pipeline, despite current quarterly losses. While Group revenue was pressured by a 30% YoY decline in DLM due to external uncertainties, the DLM segment achieved its 10% EBITDA target. Management maintains a confident outlook, targeting a 15% DET EBIT margin by Q4 FY27 and projecting high-teen growth as large deal conversions accelerate in the coming quarters.
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