Cyient DLM shares have rewarded investors handsomely since the listing of the stock of the electronics manufacturing services and solutions provider on the bourses in July. As of December 20, the stock commands a premium of 142 per cent over the upper end of the issue price of the company’s IPO, and counting.  

Brokerage InCred Equities remains bullish on Cyient DLM, a qualified supplier to global OEMs in the aerospace and defence, medical technology and industrial sectors. The brokerage has retained its ‘add’ rating for the stock with a target price of Rs 880 apiece, which implies a potential upside of 37.2 per cent. 

Here are some of the key points that the brokerage has pointed out about its take on Cyient DLM:  

A&D segment of Cyient DLM seeing good traction 

According to InCred, Cyient DLM’s aerospace and defense (A&D) segment is seeing good traction, with the majority of new orders in the pipeline from this space.  

Due to the prevailing geopolitical situation, related to war between Russia and Ukraine, and between Israel and Hamas, companies like Thales Avionics, Rafale Advanced Defense and Honeywell, which are also clients of Cyient DLM, are seeing huge order inflows, analysts at InCred underlined. 

Cyient DLM currently has orders worth $1 billion in the pipeline. A majority of those orders are from the A&D segment, which accounts for nearly 70 per cent of the company’s revenue. 

Moreover, with the defense policies of NATO countries becoming more aggressive, this trend is expected to continue for next few years, according to the brokerage. 

Honeywell Advanced Air Mobility division (AAM) is another growth engine 

Cyient DLM currently manufactures PCB Assembly for Honeywell Anthem, the new age avionics suite by Honeywell. This falls in the Advanced Air Mobility division (AAM) for Honeywell, where the company has secured close to $10 billion new order wins.  

It is to be noted that Cyient DLM and another US-based EMS company are the sole suppliers for PCB Assemblies for Honeywell Anthem, the brokerage added in its report. 

Precision machining a higher gross margin business  

The company recently expanded its precision machining manufacturing facility in Bengaluru. Precision machining is a higher margin business for the firm with 30-40 per cent gross margins, albeit with lower asset turns. However, it won’t contribute more than 10 per cent to the top line going forward, according to the brokerage. 

InCredit Equities is bullish on the company’s long-term growth prospects as it believes the tailwinds in A&D are structural in nature and are here to stay.    

What other analysts make of Cyient DLM 

According to Motilal Oswal Financial Services, which has a ‘buy’ rating on Cyient DLM with a target of Rs 870 (35.7 per cent above the current price, the integrated EMS and solutions provider is likely to capture its share of the pie on the back of its strong core competencies and high technical capabilities.

Analysts at the brokerage expect Cyient DLM to sustain its growth momentum aided by its strong order book coupled with healthy order inflows, high customer stickiness, and strong promoter heritage, they wrote in a research report dated October 16.

Motilal Oswal Financial Services estimates the EMS solutions provider to register CAGRs of 41 per cent, 46 per cent and 83 per cent in revenue, EBITDA and adjusted PAT over FY23-26, respectively.

The brokerage values Cyient DLM at 35 times its estimated earnings per share for the financial year ending March 2026.