Rationale

 The rating assigned to Cyient DLM Limited (CDLM) factors its strong parentage with Cyient Limited holding a majority stake (~52% as of December 2025) and an established track record in the Indian electronic manufacturing services (EMS) industry. Cyient Limited is a large and reputed global player in the information technology and engineering services industry, with over three decades of operational track record. The rating derives comfort from the strategic, operational and financial linkages that CDLM shares with its parent, including the product level synergies, access to group-level design expertise, long-standing customer relationships and a demonstrated track record of funding support from the parent. Cyient Limited has historically extended financial assistance to CDLM, underscoring the latter’s strategic and reputational importance within the group. CDLM’s business profile remains healthy, supported by its presence in niche segments such as aerospace, defence, industrial and MedTech and strengthened by consistent order inflows and sizeable order book of ~Rs. 2,349 crore as of December 2025 (translates into book-to-bill ratio of ~1.5 times, providing medium-term revenue visibility) and a growing share of design-led build-to-specification (B2S) offerings. This has enabled the company to grow to healthy scale of operations and maintain comfortable leverage and liquidity metrics, a trend which is expected to sustain over the medium term. The rating positively factors in the improvement in the financial profile, driven by the strengthening of the net-worth base post its initial public offering (IPO), wherein there was an infusion of ~Rs. 700 crore (including pre-IPO placement) in FY2024, coupled with reduction in working capital borrowings to nil in FY2024, which was one of the key objects of the public offer. The coverage indicators are expected to improve FY2027 onwards on account of the expected improvement in margins driven by ramp-up in scale of operations and B2S offering and a range-bound increase in the debt levels in the medium term. The rating is, however, constrained by the working capital intensive nature of business, given the inherent nature of the aerospace and defence (A&D) business and the high mix, engineering critical product profile, which have a longer lead time and necessitate higher inventory levels and longer receivable cycles. CDLM remains exposed to fluctuations in raw material prices and global supply-chain dependencies, though these risks are partly mitigated by the pass-through arrangements with most customers and the natural hedge provided by its export-driven revenue base. In October 2024, CDLM acquired Altek Electronics, making it a wholly-owned step-down subsidiary. The acquisition (and scale-up thereafter) is expected to strengthen CDLM’s business profile through Altek’s established presence in North America, which has a diversified client base and potential cost efficiencies. Altek, which primarily offers PCB assembly and box builds, is currently under integration with CDLM. CDLM continues to evaluate inorganic growth opportunities. Any higher-than-anticipated debt-funded acquisitions that materially weaken its debt protection metrics would be a key rating sensitivity. The Stable outlook reflects ICRA’s expectation that CDLM will maintain a comfortable financial profile, on the back of expected improvement its operating margins and scale over the medium term, supported by ramp up of utilisation of its existing manufacturing capacities and increased contribution from B2S offerings.