Cyient (CYL IN) – Q2FY27 Result Update – Strong performance, focus on consistency – ACCUMULATE

Cyient DET delivered a healthy Q2FY27 performance, with revenue growth of 7.5% QoQ CC, ahead of our estimate of 4.7%, including US$9.6mn contribution from TAO Digital, while organic growth stood at 1.6% QoQ CC. EBIT margin expanded ~100 bps QoQ to 14.2%, beating our estimate of 13.5%, driven by cost optimization initiatives and TAO Digital's contribution. Transportation & Mobility sustained its momentum (+4.5% QoQ CC), supported by automotive, mobility and commercial aerospace, while Networks & Infrastructure remained broadly flat (-0.3%) amid project completions and weakness in utilities. Strategic Units declined 1.5% QoQ CC, reflecting continued softness in energy and other strategic markets. Order intake remained strong at US$158mn, up 20.8% YoY, while technology order intake grew 39.7% YoY, indicating healthy traction in data, AI and digital engineering. The multi-year consumer goods framework agreement with potential to ramp up (EUR 50mn annually), provides additional growth opportunities. Management expects cost optimization initiatives to support margins and offset wage hikes impacts in H2FY27. The strong order intake and a healthy pipeline support the revenue outlook, while growing contribution of recurring revenue would be a key monitorable. We pass on the Q2 beat and revise our DET CC revenue growth estimates to 11%/10% for FY27E/FY28E (from 6.3%/9.0% earlier), translates to organic growth of 1.3%/3.7%, respectively. We also revise our DET EBIT margin estimates to 14.0%/14.3%/14.5% for FY27E/FY28E/FY29E, respectively. We maintain our ACCUMULATE rating on the stock, with a revised SOTP-based TP of INR 1,310 (earlier INR 1,240).