Brokerage Upgrade Sparks Rally in Cyient DLM Shares

Shares of Cyient DLM, a small-cap IT and electronics manufacturing services (EMS) player, rallied over 8% on March 28, following an upgrade from Kotak Institutional Equities. The brokerage revised its rating from “Sell” to “Reduce”, citing the stock’s sharp price correction and improved valuations.

The upgrade came despite Kotak lowering its fair value target for Cyient DLM shares to ₹440, down from its earlier estimate of ₹560. The revision reflects a weaker growth outlook for the company, particularly due to a muted order backlog and delays in order finalizations by U.S. customers amid tariff uncertainties.

Adding to the stock’s momentum, Motilal Oswal acquired 5.3 lakh shares of Cyient DLM in a bulk deal during the previous trading session, indicating institutional interest in the stock despite near-term challenges.

Stock price surge on March 28: Over 8% increase
Kotak’s revised rating: Upgraded from “Sell” to “Reduce”
New fair value target: ₹440 (previously ₹560)
Key investor activity: Motilal Oswal purchased 5.3 lakh shares in bulk deal

Weaker Order Backlog and Revenue Growth Slowdown Weigh on Outlook

Despite the brokerage upgrade, Cyient DLM faces near-term headwinds due to sluggish domestic revenue growth and delays in international orders. The company’s largest domestic contract with Bharat Electronics Ltd (BEL), which contributed significantly to revenues in FY24 and 9MFY25, is reaching its completion stage, leading to a temporary slowdown in domestic sales.

Kotak Institutional Equities highlighted that 39% of Cyient DLM’s FY24 revenues and 45% of its 9MFY25 revenues came from the Indian market, with the BEL order playing a crucial role. With this major contract nearing its end, the domestic revenue pipeline is expected to remain weak in the near term.

Meanwhile, in the U.S. market, order finalization delays due to tariff uncertainties have contributed to a soft order backlog, further dampening revenue visibility for early FY26.

Key domestic revenue contributor: BEL order (significant share in FY24 and 9MFY25 revenues)
Domestic revenue impact: Likely slowdown post-BEL order completion
International challenges: Order finalization delays in the U.S. due to tariff uncertainty

European Defense and New Acquisitions to Drive Export Growth

On the exports front, Kotak sees potential revenue drivers emerging from the European defense sector and recent strategic acquisitions. The brokerage highlighted that new client additions in Europe, coupled with the Altek acquisition, could help offset some of the domestic slowdown.

The company’s growing footprint in the European defense segment is particularly noteworthy, as the region’s increased defense spending amid geopolitical tensions has led to a higher demand for electronic manufacturing services.

However, despite these positive developments, Kotak has slashed its revenue growth forecast for FY26 to 5%, down significantly from its previous estimate of 32%, citing the overall weakness in the domestic market and slower-than-expected export momentum.

Key export drivers: European defense sector growth and Altek acquisition
Revenue growth forecast for FY26: Revised down to 5% from 32%
Geopolitical tailwinds: Higher defense spending in Europe may benefit Cyient DLM

Stock Performance and Market Sentiment

As of 3:05 PM on March 28, Cyient DLM shares were trading at ₹458.6 per share, marking a 2.8% increase on the NSE. The recent price correction appears to have provided investors with a buying opportunity, as indicated by Motilal Oswal’s bulk purchase.

Despite the near-term headwinds, analysts remain watchful of long-term growth catalysts, including the company’s expansion in high-margin export markets and its ongoing efforts to diversify revenue streams beyond the domestic segment.

Current trading price (March 28, 3:05 PM): ₹458.6 per share
Stock movement during the session: Up 2.8% on NSE
Institutional investor sentiment: Positive (Motilal Oswal’s bulk deal suggests long-term confidence)