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Informist, Monday, Jun. 1, 2026

--Cyient: Tao Digital clocked high organic, inorganic growth in past few yrs 

--CONTEXT: Cyient mgmt's comments from concall on Tao Digital acquisition 

--Cyient: Aim to retain Tao Digital key mgmt officials beyond lock-in period 

By Shakshi Jain and Arundathi A R

NEW DELHI/MUMBAI – Mid-tier engineering company Cyient Ltd. aims to retain the key management personnel of Tao Digital Solutions Inc. beyond the lock-in period, a top company executive said in a conference call with analysts Monday. "...As you see in the deal structure itself, there's a two-year earn out, and it is substantially incentivising the management team for that two-year earn-out. So, that is a clear lock-in which is there. Having said that, in terms of intent and the journey they are on and what they see ahead with us, there has been extensive discussion, and the intent is for the key management personnel to continue for sure even beyond the two years."

On Saturday, Cyient said it is acquiring 100% stake in the US-based digital solutions firm for an enterprise value of $218 million in an all-cash deal. Its valuation is 9.5 times its estimates for calendar year 2027's earnings before interest, tax, depreciation and amortisation, excluding management incentives and retention schemes. This strategic move is geared towards helping fast-track clients to a data-ready foundation enabling artificial intelligence at scale, faster outcomes, and sustainable competitive advantage, as per the company.

The move aligns with Cyient's customers' next three-five-year growth plans around services revenues and scale, especially in the aerospace, energy, and medical technology sectors, the company said in a presentation to investors. It added that the deal drives the shift from a $100 billion total addressable market in engineering research and development to an estimated $2 trillion.

The announcement comes after Informist in April reported Cyient was in advanced talks to sign merger and acquisition deals, and one such deal could be announced in the ongoing quarter itself. The report was based on an exclusive interaction with Shrinivas Kulkarni, chief financial officer of the company's digital, engineering, and technology business.

Tao Digital's revenue improved from $19.7 million in 2023 to $50.3 million in 2024, which then increased by another 57% to $79.1 million in 2025. 

According to executives from Cyient, Tao Digital has registered strong organic as well as inorganic growth in recent years. The four-year-old startup's EBITDA margin is around 20% and it expected to remain along similar lines after the one-time integration charges, a company executive told CNBC-TV18 soon after the conference call with analysts. 

The acquisition will be funded primarily through debt and roughly 60% of the payment i.e. $130 million will be made upfront with the remaining linked to outcomes or earn outs over the next two years. "Large part of the debt serviced by asset's FCF (free cash flow)," Cyient said in the investor presentation.

For the March quarter, Cyient reported a consolidated net profit of INR 548 million on revenue of INR 19.27 billion. At 1222 IST, shares of the company traded 0.6% higher at INR 914 apiece on the National Stock Exchange.  End

US$1 = INR 94.95

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Deepshikha Bhardwaj

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