Cyient DLM has received a maintained Accumulate rating from Prabhudas Lilladher, with the brokerage revising its target price to ₹418 from the earlier target of ₹439. The recommendation is based on the company's strong operational performance and diversified growth prospects across multiple business segments.

Strong Margin Performance in Q3FY26

The company demonstrated impressive margin expansion during Q3FY26, with margins improving by approximately 390 basis points. This significant improvement was primarily attributed to a decline in the share of the lower-margin Defense segment in the overall revenue mix.

Despite reporting these exceptional items, the company maintained strong underlying operational performance during the quarter.

Business Expansion and Client Additions

Cyient DLM successfully expanded its client base during Q3FY26 by adding two new clients across different segments:

• Medical segment client: Focused on battery management systems
• Industrial segment client: Supporting high-precision and electrical motor controls

The Build-to-Specification (B2S) segment is positioned to become a significant growth driver, with expectations of contributing 6-7% to the topline in FY26. From FY27 onwards, this segment is projected to deliver double-digit contribution, further supporting the company's margin expansion trajectory.

Diversified Growth Strategy

The company expects its revenue growth to be well diversified over the next 2-3 years, with contributions coming from multiple segments including Aerospace, Industrial, Defense, and Automobile sectors. This diversification strategy is expected to reduce dependency on any single segment and provide stable growth momentum.

Financial Projections and Valuation

Prabhudas Lilladher has projected strong growth metrics for the company over the forecast period:

The brokerage expects EBITDA margin expansion of approximately 140 basis points during this period. However, earnings estimates have been revised downward by 2.8% each for FY27 and FY28. The revised target price of ₹418 is based on 26x Mar'28 earnings, reflecting confidence in the company's long-term growth prospects despite near-term estimate adjustments.

Cyient DLM faces continued pressure from analysts as Kotak Securities maintains its cautious stance on the engineering services company. The brokerage has kept its 'reduce' rating unchanged while making a downward revision to its price target.

Analyst Recommendation Update

Kotak Securities has set a new target price of ₹385.00 for Cyient DLM shares, representing a reduction from its previous target. The brokerage continues to maintain its 'reduce' rating on the stock, indicating a negative outlook on the company's performance prospects.

Market Implications

The maintained 'reduce' rating coupled with a lowered target price reflects Kotak Securities' concerns about Cyient DLM's ability to deliver strong returns in the current market environment. A 'reduce' rating typically suggests that analysts expect the stock to underperform relative to the broader market or its sector peers.

The downward revision in the target price indicates that the brokerage has become more conservative in its valuation assessment of the company. This adjustment may be based on various factors affecting the engineering services sector or company-specific challenges that could impact future performance.