Cyient DLM Shares Fall 12 Percent Despite Q2 Profit Growth

Cyient DLM shares plunged 12.24 percent on Friday, October 16, even as the electronics manufacturing services company reported higher revenue and profit for the September quarter. The drop happened because investors worried about narrow operating margins, ongoing growth costs, and split views from brokerages.

Financial Results

During the second quarter of fiscal year 2027, the company reported revenue of 393.1 crore rupees, which is up 26.5 percent from last year. Earnings before interest, taxes, depreciation, and amortization increased by 9.5 percent to 34.2 crore rupees. However, the EBITDA margin shrank by about 130 basis points to 8.7 percent due to higher sales expenses and product development costs. Reported profit after tax reached 34 crore rupees, which includes a one-off gain of 18.2 crore rupees from an earnout reversal. Normalised profit after tax, which shows the real underlying performance, rose 25.8 percent to 15.82 crore rupees.

Brokerage Views

Brokerage firms held very different views on the stock. PL Capital kept a 'Reduce' rating and lowered its target price to 873 rupees, pointing to margin pressure and spending. In contrast, Motilal Oswal kept a 'Buy' recommendation with a target price of 1,320 rupees in a report dated October 15, 2026, citing strong aerospace demand and a growing order book.

Order Book and Expansion

The company reached an all-time high order book of 2,813.7 crore rupees, with order intake rising 11 percent quarter-on-quarter. Aerospace and industrial sectors led the growth, alongside defence and medical segments. Managing Director and CEO Rajendra Velagapudi noted that strong execution and the record order book give clear revenue visibility for the future.

Context

Stock markets often react strongly when a company's costs grow faster than its operating profits, even if overall revenue looks healthy. When brokerages disagree sharply on a company's valuation, it tends to cause bigger price swings as investors rush to book profits after a long rally.