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Informist, Thursday, Jul. 23, 2026

 

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--Cyient: Have a strong order pipeline in semiconductor services ops 
--CONTEXT: Comments by Cyient's management in post-earnings analyst call 
--Cyient: Saw slowness in discretionary spending by clients in Q1 
--Cyient: Do not see co's EBIT growth guidance being met by Q4 
--Cyient:Investments in semiconductor ops partly offset group Q1 EBIT growth 
--Cyient: See breakeven in semiconductor ops happening only in FY28 
--Cyient: See 15?IT margin target being reached couple of qtrs into FY28 
--Cyient: No W Asia war impact yet on client programs in transportation 

 

By Ashutosh Pati and Rajesh Gajra

 

MUMBAI – Cyient Ltd. will not be able to achieve its 2026-27 (Apr-Jun) exit guidance for earnings before interest and tax margin of 15% by the March quarter, the management told analysts late Thursday in a post-earnings conference call. The company now expects to achieve the EBIT margin target a couple of quarters into FY28, the management said.

 

"We are still working towards a 15?IT but we now believe that this may take a little longer than the Q4 FY27 we originally aimed for," a top official said. "Our plan rested on two things" our internal focus on cost and a certain revenue growth trajectory. We remain firmly on track on the cost side and it is the revenue ramp-up where we are running a little behind and that is where our attention is now."

 

The company is currently witnessing slowness in the awarding of discretionary projects as customers across the globe have been cautious on starting new programmes. This is mainly due to uncertainties and supply chain disruptions stemming from the West Asia war. Cyient's consolidated EBIT margin rose slightly to 9.7% in the June quarter from 9.5% in the previous quarter. EBIT margin for its leading digital, engineering, and technology segment was 13.2%, up 79 basis points sequentially. "This EBIT outcome is despite higher restructuring costs over our near-term quarterly average that we experienced in Q1," the top official said.

 

Cyient said its EBIT trajectory has two elements that work in tandem--cost and optimisation levers and absorptions. The former is largely on track, but the company is facing issues on the absorption front. "Now, on the first part, which is not controlled, those are on track. I think we are working on a number of levers like the rate increase from customers, the productivity- and automation-related savings, the G&A (general and administrative) optimisation, etc. But on the second part, since growth has been muted, I think we will see the absorption coming in a little late," the official said.

 

The war in West Asia has not had an impact yet on customers in the company's transportation and mobility vertical. "But theoretically, if the disruption continues longer, definitely there is a threat to the number of flying hours, which has already had some impact... obviously, if flying hours continue to be affected, revenue gets affected in the industry and that obviously will translate to some compression," the official said.

 

SEMICONDUCTORS

Cyient's third and smallest segment, semiconductors, is expected to achieve breakeven only in FY28. The company has a strong order pipeline in the semiconductor services operations. It continues to see strong demand for both scientific business and the recently acquired Kinetic Technologies in the US. Cyient's wholly-owned subsidiary Cyient Semiconductors acquired 74% stake in Kinetic Tech for $85 million in April.

 

Continued investments in this segment have also partially offset the growth in the company's EBIT margin, the management said. "Our semiconductor business has a higher gross margin than the services business, which is expected. But as I said, there's two parts to the custom product or ASSP (application-specific standard product) business. One is, of course, what we acquired, but the second is the design and development of certain high-voltage products. Now, that still will consume cash for the next four, five quarters at least. That's why I say breakeven in FY28," the official said.

 

The company reported a consolidated net profit of INR 1.04 billion for the June quarter, up around 90% sequentially. However, this was well below analysts' expectation of INR 1.50 billion. Cyient's consolidated revenue for the quarter was up nearly 7% sequentially at INR 20.76 billion, higher than expectations of INR 17.44 billion.

 

The company reported its June quarter results after market hours Thursday. Its shares closed at INR 830.65 on the National Stock Exchange, down 1.5% from Wednesday.  End

 

US$1 = INR 96.57

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

 

Edited by Rajeev Pai

 

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