Cyient DLM’s Stock Soars 183%: The Multibagger Everyone’s Talking About – Is It Still a Buy?

Cyient DLM, an integrated electronics manufacturing services (EMS) company, is performing impressively, with its stock trading 183% higher than its IPO price. Here’s a closer look at whether it remains a good buy.

Why Cyient DLM Stands Out

Growing EMS Sector: Cyient DLM operates in the EMS sector, which is just beginning to take off in India. In 2022, this sector contributed 0.6% to India’s GDP but is expected to grow rapidly at 32% annually from 2021 to 2026.

Promising Market Prospects: The global electronics market was worth $2.5 trillion in 2021, with EMS contributing $880 billion. India’s share was small, at $20 billion or 2.2% of the global market. However, with the Indian government promoting electronics manufacturing and increasing exports, the sector is set for significant expansion.

Expert Recommendations

LKP Securities’ Take: LKP Securities recently started covering Cyient DLM, giving it a ‘buy’ rating with a target price of ₹851 per share. They cite strong growth potential and the company’s unique position in a booming industry.

Strong Parent Company: Cyient DLM benefits from being part of Cyient Ltd. It has solid relationships with its clients, a strong order book, and capabilities in high-growth areas that set it apart from competitors.

Industry Challenges and Cyient DLM’s Edge

High Entry Barriers: Cyient DLM operates in regulated and complex sectors such as aerospace, defence, and medical technology. These areas are challenging to enter, giving Cyient an advantage over potential competitors.

Growth and Revenue Outlook

Robust Order Book: The company has shown impressive growth in orders, with a compound annual growth rate (CAGR) of 64% from FY21 to FY23. Orders increased from ₹10.1 billion in FY22 to ₹20.6 billion in FY23. Though the order book slowed a bit in FY24, it’s expected to pick up again in FY25.

Expanding Services: Cyient DLM is expanding into higher-value segments and shifting towards more profitable services, which should help boost margins and revenue.

Future Prospects: The company’s focus on high-value customers and a strong portfolio in aerospace and defence positions it well for future growth. Industry trends and the company’s strategic moves are expected to result in impressive growth rates for revenue, EBITDA, and profit over the next few years.

With a strong market position, robust order book, and expansion into high-value segments, Cyient DLM looks set to continue its growth. Despite its significant rise from the IPO price, experts believe it remains a promising buy for the future.