Cyient Q4FY18 Concall Summary



  • Revenues have grown to $607 million. It is a very strong growth, 12.9% in dollar terms and 11.7% growth in constant currency terms and this would be observed across all the eight business units of the company.
  • The operating profit for the year stood at Rs.594.2 Crores, which is a growth of 13.3% compared to the previous year.
  • The net profit for the year was at Rs.429.6 Crores, a growth of 16.1% over the last year.
  • A final dividend of Rs.4 per share is declared in this quarter, which takes the total dividend for this financial year or the financial year 2017-2018 to Rs.13 per share for the full year.
  • In terms of the cash, Cyient has a good cash of about 10,937 million. This is after paying the dividends at the enhanced payout of about 40% for this year.
  • Cyient  has made 408 million of other income and for the year 1,489.


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  • Revenue is $164.6 million, the highest ever in a single quarter, signifying a growth of 16.8% year-on-year, 8.3% quarter-on-quarter in dollar terms.
  • All the eight based business units have witnessed a similar growth year-on-year basis. The services revenue came up at $142.7 million signifying a strong growth 14.3% in year-on-year term.
  • Operating profit for the quarter stood at Rs.149.2 Crores, which is 19.6% growth on a year-on-year basis.
  • DLM/Design Led Manufacturing witnessed the highest ever-quarterly revenue and the operating margins in the recent years.
  • Net profit for the quarter stood at Rs.121.5 Crores with the growth of 16.2% year-on-year terms over the last financial year.
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Tax Rates

  • The tax rate for the exit quarter is about 25% 
  • With the focus on SEZ, they are looking at the full year benefit of US taxation, so definitely there is good possibility of much reduced tax rate in the next year.

DLM (Design Led Manufacturing)

  • The total pipeline in DLM is about quarter billion dollar, and the adjusted figure will be about 50%, 60% of that.
  • DLM had extraordinary growth in between the two quarters and because of that the working capitals had been consumed, so the free cash flow has been negative, but management is working on generating the free cash flow in case of DLM.


  • Cyient continue to support 25 government schools for education of the underprivileged children.
  • As a part of initiative to increase IT literacy, they have added one more Cyient Digital Learning Center, which now takes the total to 57.
  • Cyient was recently recognized by the Telangana Government for the green initiative wherein 6000 sampling have been planted in our facility.

Business updates 

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  • Cyient is planning to expand their Pune facility to about 100 FTE.


  • On the operation front, Cyient and Bluebird Aero Systems Limited of Israel signed a MoU to address the opportunities in the Indian UAV space and subsequently have entered into a joint venture on April 11, 2018. The joint venture is 51% owned by Cyient and 49% by Bluebird.
  • Bluebird brings 3 technologies: SpyLite, ThunderB, MicroB which are quite unique, and some of the things applications that they can be used in are very relevant for India, for example high attitude or the varied conditions that exists across the country or rather long coastline that we have in the country.
  • Therefore, the JV after the transfer of technology will indigenize, manufacture, integrate, test, support UAV systems and Cyient is in the process of building up a factory for this in Hyderabad with 100 systems a year.
  • The investments will be relatively minimal because the factory for example to produce UAV is quite it is not very capital intense. Payback is quite attractive.


  • Cyient created the initiative called New Business Accelerator (NBA) to facilitate innovations within Cyient to really focus on developing new products service and solution.
  • Cyient are committing this year that is about 100 basis points of revenue or margin, so about $7 million plus will go towards the NBA initiative.
  • $7 million is a combination of opex and capex and some of these will also be quite Capex intensive because how the technology is being developed.
  • There is pretty clear revenue plan because for something to get funded through the NBA there is process that is followed and one of the key elements that the processes or business case wherein management have clear anticipation of what is the revenue that it is going to generate out of particular business.
  • Cyient would see a lot of investments in newer and emerging technologies because the focus is now not just on building a better asset that maintaining it and running it more effectively, which means that people are embedding a lot more in terms of IoT and distributed computing and so on and so forth into the train itself. 
  • The utilities and geospatial market is also seeing some good traction.
  • Aerospace  and defense is expected to grow by 10%.
  • Cyient also became the founding member of Xynteo India, 2022 consortium; this is the government of India initiative to enable affordable medical facility to widest section of the society.
  • Their IRIS certification was extended to comply with ISO TS22163:2017 after its successful audit.
  • In terms of services business, they continue to have a good conversion of about 45%.

Growth in Services

  • There is no particular that is going to stand out. The medical business will grow at a fairly good way just because it is a small business unit, similarly with semiconductors.
  • Although there was a dip in terms of the aerospace customer, but going forward there will be sustaining of revenue because of new opportunities coming up in this area.
  • Services sector order intake for this quarter was a bit soft but forward-looking revenue targets is in place that there is no such decline if looked at full-year and also the overall pipeline is the highest ever and have more than billion dollar of pipeline.
  • Service sector margins is about 16% for next 2 to 3 years which can be moved up by 100 or 200 basis points but then investments have to be cut which are done for FY2020.
  • Cyient is confident with the operational improvements are going to be such that they will improve despite the wage hike, the services margins by 100-basis points and after making the investments, service margin will be flat.


  • There are two buckets into which the investments are going. The one is complete subsystems and the second is emerging technology:
  • There is a lot of work that is being done in machine learning in areas of interest for example the geospatial business machine learning from extrapolating features from a map, etc.
  • Second bucket of investment is developing products where subsystem level or assembly or sports system level and Cyient are able to actually completely design and own a subsystem.
  • Cyient have five customers in transportation unit given that it is concentrated industry and four out of that five grew in double-digit, so that was beneficial.
  • The free cash flow for services business typically targeted about 40% to 50%.
  • After generating the positive EBITDA and then over a period of time, a conversion like 40% of EBITDA to free cash flow in DLM can be achieved.
  • Breakeven is targeted for the next year for DLM, so next year also negative cash flow for DLM can be anticipated.

Cash Flows

  • Cyient have seen very handsome growth in this particular year. They have also seen that year-on-year our DSO has reduced.
  • There is no headwind on capex. There was a slight headwind on the tax this year but not anymore.
  • The impact of the foreign exchange fluctuation on March 31 wherever receivables are restated to the extent of about Rs.20 to Rs.23 Crores. Internally management is not at all worried on free cash flow, they are on the right track, having delivered a good conversion of about 50%.
  • 3 Subscale segments: semiconductor, off-highway and medical
  • Each one of the businesses different strategies; medical is quite bullish on design to build, so Cyient do designing, build manufacturing is a part of it, so which means very strong transaction is being witnessed there.
  • Semiconductor is also in a similar situation. So the semiconductor is also trying to beef up both internally and externally.
  • According to management, Off-highway equipment will be done internally.
  • Both semiconductor and medical especially are very, very important for the long-term growth because those are emerging areas and some very strong traction is witnessed.

Future margin

  • The business is transforming more into design led manufacturing. A lot of onsite centers have been put up in for aerospace as well as other verticals.
  • Now with business moving more to end-to-end, 14% margin would be the new near normal.


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