Ladies and gentlemen, good day and welcome to Cyient DLM Limited Q3 FY 2026 earnings conference call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Krishna Bodanapu, Non-Executive Chairman, Cyient DLM Limited. Thank you, and over to you, sir.
Thank you very much, and good evening, ladies and gentlemen. I am Krishna Bodanapu, Non-Executive Chairman of Cyient DLM, and I welcome you all to our Q3 FY 2026 earnings call. Joining me today on the call are our Managing Director and CEO, Mr. Rajendra Velagapudi, and our CFO, Mr. R.M. Subramanian, R.M.S. I would also take this opportunity to welcome R.M.S to Cyient, and also to state that this is his first investor call as the CFO of Cyient DLM.
Before we begin, I would like to remind you that certain statements made during this call may be forward-looking in nature and subject to risks and uncertainties. A detailed disclaimer is available in our investor update posted on our website. Let me start with the order book situation. We are pleased to share that the order momentum remains strong and continues to move in the right direction.
Our book-to-bill ratio for the quarter is above one for the third consecutive quarter. This underscores the sustained demand environment and the effectiveness of our commercial strategy. A significant portion of the new wins this quarter have come from customers we onboarded this past year, clearly an evidence that our investments in customer acquisition are starting to pay off. To support this momentum, we continue to strengthen our sales engine, both in India and across key international markets.
We are in the process of adding a number of key strategic sales resources, many of whom have joined and few of whom will join before the end of the year, completing what we believe is the optimal sales team to continue to grow Cyient DLM. With these additions, the team will be well-positioned and well-equipped to pursue larger opportunities that are emerging in our sector.
We are also deepening our engagement with existing customers by participating earlier in their design cycle. What this does is it meaningfully enhances our long-term viability and our strategic-ness to the customer since we are deeply embedded in their design and manufacturing cycles. Several customers are also showing interest in partnering with us both for redesign and new product launches, and this positions us not only as a manufacturing partner but as a strategic collaborator through the product life cycle. Coming to revenue, our revenue for the quarter has been soft. This is due to some customer-specific issues that were caused by year-end holiday period and the tariff-related uncertainty. A number of our customers have been in a wait and watch mode to ensure or to understand how the tariff situation settles before they start.
Already are on track to ship in the current quarter, and we do not expect any prolonged impact. This positions us for a stronger performance in the incoming quarter, with positive momentum carrying forward into the next financial year. A particularly strong highlight this quarter is the continued strengthening of the margin profile across both revenues and on the order book. The orders that have been booked are forecasted and projected to come at a much better margin than what we've historically delivered.
The quality of our order book has also improved significantly with a clear shift towards high-value programs and more efficient execution. This margin is already visible in our double-digit EBITDA margin, which demonstrates the underlying resilience and profitability of our business model. You may see that there is an adjusted margin for this quarter, and this adjusted margin is primarily for two reasons.
One is the new labor code, which is a one-time impact, and the second is some M&A impact, which has not materialized and therefore the cost of which has been expensed this quarter. As volumes begin to scale in the coming quarters, we expect operating leverage to further enhance margins driven by better utilization, improved absorption, and a more optimized cost structure. With a healthier mix of customers, industries, and products now shaping our pipeline, we are increasingly confident that our margin trajectory will remain strong and continue to trend upwards.
We are equally encouraged by the traction we are seeing in new high-growth industries, particularly automotive, industrial, and medical. These verticals are central to our long-term strategy, and the progress we are making reinforces our confidence in our diversification strategy and resilience of our business model. In summary, we remain deeply confident about the opportunities ahead.
The robust outlook for the ESDM industry, combined with the growing momentum in India and a Build to Spec engagement capability, reaffirms our belief in the long-term potential of this business. We stay committed to driving sustainable growth, investing in innovation, and delivering lasting value to our stakeholders, including our shareholders, employees, and our customers. Thank you for your continued trust and support. With that, I would like to invite Mr. Rajendra Velagapudi and Mr. R.M. Subramanian to walk us through the detailed financial and business performance for the quarter. Rajendra.
Thank you, Krishna. Good evening, ladies and gentlemen. It is a pleasure to welcome you all and having an overview of the Q3 results with a business update. As Krishna highlighted, Q3 has been an eventful and constructive quarter for us, both from a business development and operations standpoint. Our sales engine is gaining strong momentum, reflected in deeper customer engagement and a steadily improving pipeline. Importantly, the composition of our pipeline is evolving with a rising of share from various opportunities originating from the India market. We are also seeing a healthy shift in our industry mix, with automotive, industrial, and medical segments contributing more meaningfully. To support this growth trajectory, we continue to build our sales organization, onboarding key resources in Q3, and with a few more additions planned for Q4, as mentioned by Krishna earlier.
If you look at our order book and growth outlook, I think the new wins in this quarter, combined with strong repeat business, resulted in a healthy order intake of INR 387 crore. This translates into a book-to-bill ratio of 1.3 for the quarter, and we are also seeing a year-over-year growth here, a good growth in the year-over-year. On a YTD basis, our book-to-bill ratio stands at 1.56, which is a strong indicator of robust revenue visibility for the coming quarters. Let me take you through some of the key industry shifts we are seeing in the EMS space and how we have translated those trends into tangible progress during the quarter. If you look across the industry, electrification and digitization continue to accelerate in almost every sector, from transportation and industrial systems to energy and consumer devices.
This is expanding the scope of electronics content and widening the need for high-reliability manufacturing partners. We are also seeing a clear pickup in defense spending across multiple regions. For us, this directly translates into higher opportunity funnels, especially given our heritage and capabilities in high-complexity, mission-critical assemblies. At the same time, geopolitical realignments are reshaping global supply chains. OEMs are actively de-risking footprints, and India is emerging as a credible, scalable alternative. This plays strongly to our strengths and continues to improve the quality and scale of programs we are being invited into. Another important tailwind is the surge in the AI and AI infrastructure build-outs. Data centers, edge devices, and industrial automation programs are all seeing an uptick, and we are positioning ourselves well to participate in these high-growth areas.
Finally, within India, government-led investments in defense, rail infrastructure, and manufacturing continue to expand the domestic opportunity landscape, and we see strong medium-term visibility from these programs. If you look at some of the key business highlights, we were recognized as the best performer in electronic hardware exports by the Software Technology Parks of India for FY 2024, 2025. This is a strong external validation of our quality, delivery, and manufacturing maturity. We also received a risk mitigation award from a key aerospace customer for delivering a highly reliable PCBA program. This is a testimony to validate our proactive efforts to manage threats and encouraging a culture of safety and preparedness. A major focus this year has been broadening our customer portfolio, and I am happy to share that we added just two new logos in this quarter.
The first one is in the medical sector, focused on battery management systems for medical applications. The second is in the industrial segment, where we are supporting high-precision electrical motor controls. We had a few more strategic opportunities that were in advanced stages but moved into Q4. We remain confident of converting these in the near term and will share more details in the upcoming quarter. We also commenced revenue realization from our B2S programs.
This is an important milestone, and we see a clear runway for significant scale-up in the coming quarters as the program matures. Specific to this quarter, four of our anchor customers are currently involving us in developing their next-generation products, two from transportation, one from industrial, and one from defense. We expect revenues from these programs to begin within two years, supported by healthy gross margins and higher volumes.
These engagements represent a significant long-term opportunity and are expected to meaningfully contribute to our financials from FY 2028 onwards. In parallel, we have continued to strengthen our B2S team and are identifying specific platforms and technologies to invest in. With this, we can accelerate design-led growth and deepen customer stickiness. Moving to the strategic initiatives, some of the things we just mentioned earlier, but I thought to walk you through some of the things what we are doing here, strengthening to go to the market, go to market.
A major priority this year has been strengthening our sales engine. We are building a stronger sales team across key geographies and reinforcing our cross-functional alignment so that sales, engineering, program management, and operations work as one integrated unit. Focus is very clear: acquire new logos, expand into strategic accounts, and build a robust pipeline of large multiyear programs.
This is already showing results, and we expect the benefits to compound over the next few quarters. Building operational excellence. Operational excellence remains central to our value proposition. We continue to strengthen core operational metrics with a deeper push into automation and digitization across our factories. We are investing in advanced manufacturing technologies, including MES, to enhance efficiency and throughput, while also evaluating traceability and also elevating traceability and quality systems. These investments not only improve cost competitiveness but also reinforce the reliability expectations of our aerospace, industrial, and medical customers. Moving to the next one, scaling BTS and platform play. BTS continues to be a strategic differentiator for us. This year, we are realizing BTS revenue as part of the mainstream business, and our ambition is to scale it meaningfully.
We are investing in the right building blocks, people with the right skill sets, enhanced NPI and prototype capabilities, and key technology stacks that will allow us to create a more integrated platform play. This will strengthen customer stickiness and open doors to more design-led programs. Expanding to new markets and building capabilities, I think this is another area where there is a lot of focus today. On market expansion, we are strengthening our presence in Europe, including opportunities for inorganic growth. This is a region where customers are actively looking for reliable partners, and we see a significant headroom here. Defense remains another strategic priority. We are doubling down on global defense opportunities by enhancing our on-ground presence and investing in the certifications required to participate in larger and more complex programs.
Finally, we continue to expand our capability stack, whether in cables, sheet metal, or other critical components, so we can offer customers a more complete and integrated manufacturing solution. Together, these initiatives build a stronger, more resilient, and more scalable business. They position us well for growth, both in the near term and long term, while improving our competitiveness and deepening customer relationships.
With a strong pipeline and continued traction in the India market, we expect momentum to remain robust in Q4, setting the foundation for a strong FY 2027. This gives us confidence for a solid growth path next year. Another highlight is the positive shift in business mix. Our margin profile has improved significantly in FY 2026 till date and is now structurally healthier. We reported strong gross margins in H1, and this trend continued into Q3 as well.
The new orders we are booking also carry healthy margins, reinforcing our path toward sustained double-digit profitability. As the revenue growth resumes, we expect improved absorption to drive further margin expansion. In summary, before I conclude, I would like to summarize some of the key takeaways. One is our order backlog remains strong, supported by book-to-bill ratio of greater than 1.5 on YTD basis. Build-to-spec and NPI engagements with key customers provide robust long-term visibility. Third, we are well-positioned for growth in FY 2027. Four, healthy double-digit margins with further upside expected from operating leverage. With that, I will now hand over to R.M.S for a financial update. Thank you all for your continued support.
Thank you, Rajendra. Good evening, ladies and gentlemen. I will now take you through financial performance of Q3 of FY 2026. In the finance presentation, I would like to bring to your attention the numbers presented are consolidated numbers and are normalized to separate the one-off expenses to reflect a like-to-like comparison. The one-off expenses which have been separated out are, one, M&A related expenses, and two, the impact of new wage code. We will cover these items in detail in upcoming slides. Moving on to the results. Our Q3 revenue stands at INR 3,033 million or INR 303 crores, a 31.7% year-on-year decline. This is primarily due to the completion of a large cyclical order in FY 2025. Our order book remains healthy at INR 23.5 billion, reflecting a quarter-over-quarter increase of INR 583 million.
This marks the third consecutive quarter of positive momentum driven by steady order intake. As mentioned earlier, our normalized EBITDA exclusive to one-off item. It stands at INR 309 million, a 14.4% decline year-on-year. However, in margin terms, we delivered a healthy 10.2% EBITDA at 207 basis points higher year-on-year, which is supported by favorable revenue mix and strong operational and supply chain efficiencies. On a reported basis, EBITDA is INR 275 million, translating to a 9.1% of revenues. Normalized PAT stands at INR 138 million, or 18.6% year-on-year decline. Although the absolute number is lower due to revenue impact, our PAT margin improved by 73 basis points year-on-year, reaching a 4.6%, 73 basis points higher year-on-year. Reported PAT is INR 112 million at 3.7% of revenues.
Overall, despite soft revenues, we continue to maintain a double-digit EBITDA margins, a result of healthy mix and operational discipline, with scale returning and margins having the potential to improve further due to operating leverage. This slide covers our quarterly trends in revenue and margin parameters. As we can see, revenue over the last three quarters were impacted by the large FY 2025 order completion.
However, the order built up over this period sets up for a good Q4, as we indicated in our previous call and also by Rajendra earlier. EBITDA margins remained stable at double-digit levels for the past two quarters. With the scale improving in Q4 and beyond, we are confident of maintaining and improving this trend. This slide highlights our non-P&L metrics. Order book continues to strengthen, closing Q3 at INR 23.5 billion, making three consecutive quarters of growth.
DIO inventory is elevated due to customer-specific shipment delays in Q3 and inventory build-up for Q4 shipments. It is expected to ease out by the year-end. We see a marginal increase in DSO and the reduction in customer advances due to denominator effects. However, this is largely offset by an increase in DPO driven by improved supply chain efficiency. As a result of the higher DIO, which is the primary contributor to the temporary increase in net working capital, we continue to work on taking necessary steps to improve the same. Those action expected to result in better NWC level by end of Q4. In terms of revenue shares, our industry mix is now more balanced compared to last year. With the large defense order behind us, we are seeing a healthy contribution from aerospace, industrial, and medical segment.
This shift is driven by strong sales support towards diversification and improved operational capabilities. From a product mix perspective, PCBA continues to dominate, but box build, mechanical, and other value-added services are growing steadily. This shift is also towards diversification and contributed positively to the margin expansion. While our India contribution is rising, rest of world continues to be higher, driven by long-standing customers and new additions in North American market and Europe. This slide provides the detailed P&L view for the quarter.
As mentioned earlier, revenue is lower year-on-year due to large FY 2025 order completion. However, the quality of revenue has significantly improved and along with operational and supply chain efficiencies, our normalized EBITDA margin expanded to 10.2% compared to 8.1% in the same period last year. Other income is lower due to reduced deposit income.
However, this is largely offset by a drop in finance cost due to lower borrowing and reduced interest rates. As a result, normalized PAT stands at INR 138 million, reflecting a decline of 18.6% year-on-year on a comparable margin basis, while the reported PAT is higher by 1.9%. This slide explains the bridge from our reported normalized margin. The first one relates to M&A evaluation expenses amounting to $17.77 million.
We incurred this expense to evaluate a deal that did not go through, and hence we have taken the hit in this quarter. The second one is the wage impact totaling to $16.3 million resulting from the new wage code brought in by the government of India. Both these expenses are exceptional, one-off in nature and not reflective of normal business run rate. The PAT growth reflects the same with the tax impact of these adjustments.
Moving on to the last slide in terms of IPO proceeds utilization, we continue to make disciplined progress in deploying the IPO proceeds. As of December 2025, total utilization stands at 93.2%. Working capital utilization stands at 97.2%, while CapEx utilization is 15.4%, with the balance to be deployed as planned in the coming quarters. In summary, I like to conclude the following before the Q&A. Let me summarize our performance in five key points.
Number one, order backlog remains strong with three consecutive quarters of growth and momentum building up. Number two, revenue was impacted by the FY 2025 large order completion, but we are well-positioned for a strong Q4. Number three, margins remains healthy at double digits level with further improvement expected as scale returns. Number four, net working capital is temporarily elevated, primarily due to inventory, and expected to normalize in Q4 and moving beyond. Number five, which is the last one, industry and product mix are diversified and moving in the right direction, supporting long-term margin expansion. With this, thank you for all the attention, and we can now move on to question and answers from participants. Thank you.
Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We will take the first question from the line of Sameet Sinha from Macquarie. Please go ahead.
Yes. Thank you, and R.M.S, welcome. I look forward to working with you. I guess a couple of questions here. We saw the revenue decline sequentially, which I think you explained, but how should we think about Q4? Seems like there is going to be some strength there as well. Sequentially, the revenue should grow, but how about year-over-year basis? Is that something we can expect year-over-year growth, or it is still going to be negative for Q4?
Sameet, this is Rajendra here. Yes. We see as of now, today, the plan which we have, I think we are seeing a positive year-over-year. I am confident that we will be there by end of this Q4. We will be seeing a positive growth when compared to year-over-year.
Okay. That's good. Do you have a number for the contribution from Altek during the quarter? I have a question about tariffs after that.
Sameet, I can answer this question. In terms of Altek, I think contribution is healthy. We do not get into the sort of specific with respect to individual divisions of the companies, but it continues to remain healthy and they are doing well in terms of profitability aspect.
Okay. I mean, I will just actually take this offline. About the tariffs, you mentioned that there were some customers who were concerned about the tariff environment and are probably are holding back, and you also mentioned that they are coming back now. What changed for them that they are now feel more confident about the environment?
I think basically once, I mean, earlier, we know that there was a high tariff rate there, the 50% tariff, and there are some options which we have presented to them how they can work out, to probably to reduce some of those things. That's where we help them in terms of reducing their actual tariff rates there to get the products back into U.S. Those are the options which has helped them. Probably that is going to help them to take the products in Q4.
Got it. Okay. Thank you very much.
Thank you. We will take our next question from the line of Vipraw Srivastava from PhillipCapital India. Please go ahead.
Hi, sir. Good evening. Sir, quickly on the working capital side, where do we see us ending the full year and what kind of cash flow generation are we looking at for the full year?
Yeah. R.M.S here. I can answer this question. In terms of networking capital, the past two quarters we did improve, but this quarter has been a bit of a slippage essentially because of the inventory buildup. We will come back to, in terms of trying to work on in Q4 and the whole year-end also in terms of free cash flow. That will be again positive in terms of what is this. This year is again, this quarter has been negative as we presented, but overall on a full year to date basis, we will be positive.
Right. Just quickly, secondly, on the order book side, we are seeing sequentially order book improving the last three quarters. Is it because of Altek, we are seeing nearshoring of operations in U.S., that is why Altek is getting more order book, more orders compared to, let us say, the standalone business. How should we look at it? What are the triggers driving this order book growth?
No, so it is not because of the Altek, Srivastava. It is mainly driven from the India side of the business right now. We are seeing the new customers and also I think as you have seen some of the strategy earlier where we said strengthening and expanding our existing portfolios. That is where I think the focus is happening there, strengthening the existing customers and also driving the new customers. As you said, we have added the new customers in the last two quarters we have seen, and also this quarter we added another two more customers. That is where now we are seeing the traction coming in terms of the revenues.
So the Indian order book, sir, is it on the defense aerospace side or is it on the industrial side?
Sorry, which sector you said?
This order book ramp-up you are seeing in India, is it on the defense aerospace side or is it on the industrial side?
No, it is not on the defense side, it is not. I mean, so majorly the order book what you are seeing it is on the aerospace side and then the industry is in the industrial and medical predominantly.
Right, sir. Lastly, the kind of experience we have had last time, the order book from Indian players are quite lumpy. We had one particular client. So, what are your expectations? Is this going to be structural in nature or is this one time thing or do you expect this trend rate to continue in, let's say, for next year?
It definitely continues. Not only continues, it will definitely grow. That's what I'll just tell you because as we are adding also new sales people, we'll be seeing more of those order intakes in the next quarters there.
Sure, sir. Thanks a lot, all the best. Thank you, sir.
Welcome, Srivastava.
Thank you. Before we take the next question, would like to remind participants, to ask a question, please press star and one on your phone. Next question is from the line of Balas ubramanian from Arihant Capital. Please go ahead.
Good evening, sir. Thank you so much for the opportunity. Sir, you have mentioned Q4 we may expect positive growth, and overall in FY 2026 heavily impacted by the defense step down. How do you resume the growth story for FY 2027? You can like mention about like different order assumptions or BTS ramp-up and new EDR industrial wins and you can also mention about M&A. Sir, and finally, like you mentioned about some INR 17.75 million one-time expense, that deal did not go through. Also share like what went wrong in that deal.
Okay. I think just to answer you, Bala, on the first point, what you said about the order.
Bala, can you just repeat the first question? I think you had a couple of questions. If you go one by one, it will be easier for us to answer. Let's start with the one, if you can repeat it, please.
Thank you, sir. Sir, you mentioned Q4, we can expect positive growth on year-on-year basis. How do you look at on FY 2027, like what are the contributors in terms of defense order exemptions, B2S ramp-up and new EV industrial wins and any other M&A side?
Sorry, Bala. Got it. Yeah, sorry. I think on the Q4, I think versus the FY 2020. The Q4, as I said, yes, we have the visibility. We are working towards that, and we are confident as of now that we will be seeing a positive growth year-over-year. FY 2027 is also going to be a positive growth. I mean, not a positive. It is going to be substantial, but we are not giving any guidance right now. But we are working out on the numbers. FY 2027 is going to be far, far better than FY 2026. That is what I will just probably leave it at this point of time. The other question which you asked about the $17 million, probably R.M.S can take that.
Yeah. As he said, this $17.75 million is expenditure which we incurred on a potential M&A opportunity. This did not go through. We did actively pursue it. It is an international acquisition, and since some of the terms did not fit into what we were expecting, so we had to call it off. But we continue to be on the lookout for both an organic and inorganic expansion, because that is what is in our DNA, and we continue to work on that.
Okay, sir. Sir, nearly around 40% of revenue comes from U.S., I think. Given that 50% tariff situations, how we are managing, whether it is a rehosting or shift to changes, and what percentage of U.S. destined shipments are now effectively tax-free, and what portion of, for the portion where tariffs are paid by customers temporarily. If you could talk about how quickly can production shift to alter if needed.
Yeah. I think we have already put those things in action right now, Bala. We have four options which we are working out and which we have given to our customers. Those are the things which are really helping us to reduce the impact of the U.S. tariffs on our customers right now.
Okay, sir. Sir, I think we have achieved double-digit margins, nearly 10.2%. I think we have order book of nearly 2,400, in that range. Could you please disclose in that current total order book value and the blended margin profile of this backlog compared to last past 12 months?
Yeah. Those, I think I said they are very healthy margins, whatever we have booked the orders, and whatever order book we have today. Based on the order book, margins are going to be better than what we had currently.
Sure, sir. Should I assume 70%, 80% is an order book or double-digit orders?
We don't want to be getting into the specifics. I think it's pertinent to say that the margins, in terms of the blended margin, ultimately will be equal to or better than what we're doing. With the scale benefits, in terms of what flows into EBITDA impact will be much better than what we have today. It's a combined effect of both the revenue mix and also the operating leverage impact. Both will be better on the margins.
Okay, sir. Thank you.
Thank you. Ladies and gentlemen, in order to ensure that management is able to answer queries from all participants, can you restrict your questions to two at a time? You may join the queue for follow-up questions. We'll take our next question from the line of Sukrit D. Patil from Eyesight FinTrade. Please go ahead.
Good evening to the team. I have two questions. My first question is, as the company builds on its aerospace and defense partnerships and expands its EMS footprint, what specific initiatives are being prioritized to diversify the customer base and capture opportunities in the new geographies? Over the next three to four years, how do you see Cyient DLM positioning itself to balance operational resilience with scaling global competitiveness? That's my first question. I'll ask the second question after this. Thank you.
Sure. I think we have the strategy sessions with the teams here also to the board, and we have presented the plan where we are going to be. We have a clear strategy of how to get the numbers, what we have today. Yeah, so I think it's nice. When you look at it in the next two to three years, it is going to be diversified. It won't be very high into aerospace and defense.
We'll be seeing aerospace and defense, industrial, medical, and as I said, some of the automotive side, on the transportation side and automotive side. We'll be seeing most of those things, and probably it'll be equally distributed, maybe slightly higher on the aerospace and defense. But otherwise, the rest of all the verticals and industry is going to be equally distributed in terms of the revenue growth.
Thank you. My second question is to Mr. R.M.S. With normalized EBITDA around INR 309 million and margin holding steady, how are you planning to leverage this financial strength to support capacity expansion and technology investments? Looking ahead, what measures are being put in place to optimize the cost of funds and ensure that profitability remains stable as demand patterns evolve? Thank you.
Let me try and address this in a couple of ways. From a balance sheet perspective, we are heavily leveraged. We are net cash positive. We have ability to go up to, from a pure working capital perspective, INR 350 crores to INR 400 crores. So balance sheet continues to remain strong, and we have dry powder in terms of trying to look at any new capital expansions or acquisitions. That is in terms of the balance sheet strength.
In terms of what we are looking for, we are looking for both organic and inorganic growth, and we continue to be scouting for opportunities. We acquired Altek Electronics a year back, and there are continuing work to look at acquisitions more from a geography and capabilities perspective. We will be looking at all of this, trying to add to our capabilities and deliver value to the customers as we move forward.
Thank you for the guidance, and I wish the entire team success for next quarter.
Thank you.
Thank you.
Thank you. We'll take our next question from the line of Purva Jhaveri from OnePlus Financial Consultants. Please go ahead.
Hello, sir. Thank you for the question.
I'm sorry, can you use your handset mode, please, Purva?
Yeah. Hello. Hello. Am I audible? Hello?
Yeah.
Yeah. Go ahead.
Go ahead with your question.
First question, how many lines do we have for PCBA and box build? As I am new to the company, can you just brief me that how many lines for the PCBA and box build?
PCBAs, we have globally close to around seven lines. And box build is basically all these are the back-end operations. Correct? So wherever there is a box build, we are just having the back-end operations. Not that we need to have separate lines or anything for the box build.
Sir, what will be the peak revenue per line for the PCBA if you can invest for one line of PCBA? What will be the peak revenue we can do? That's the first.
Yeah. I think questions about how much of revenue you can do with.
Yeah.
Remember, Purva, our business is a high-mix sort of low-volume business.
Okay.
You can't measure our business in terms of the lines and output through the lines. It's a complex product of what we do with high levels of testing. That's not our conventional measure where we look at. That's only applicable for high-volume business. I don't want to be getting into measuring based on that. It suffices to say that we have sufficient capacity, and in terms of our capacity utilization, it's about 50% to 60%. We have substantial capacity in what we're delivering it, and we are able to deliver the double-digit margins. If you are able to push the throughput further up, for which there's substantial work going on, we will see the operating leverage and that coming into the margin effect as well. I think that's the best way to put it across.
All right, sir. Sir, just lastly, what are the expectation on the CapEx going forward?
In terms of the CapEx, what we have is the regular CapEx and maintenance, which we continue to do.
Okay.
Which is anywhere between 1%-2% of the revenues, which we will do. And if there are any specific customers who will look for further CapEx or an addition line or any custom specific requirement, we have enough dry powder, which we talked about, and we can do it in a pretty quick time. We have land and infrastructure and buildings, which is the long lead items. That is already covered. For us to add any equipment or line, it is probably three-six months timelines, and we can pretty much up and running in no time if required.
All right, sir. Thank you for the time.
Thank you. Next question is from the line of Deepak Lalwani from Unifi Capital. Please go ahead.
Hello, sir. Thank you for the opportunity. First question is on the tariff impact that we saw in this quarter. How much of our shipments were deferred from Q3 to Q4? That is one. And the connecting question to this is, if you can call out how much of revenues are shipped from India to the U.S. and the solution that you are finding to the tariff as to how much of this is shifted to the U.S. production. And should we assume that the rest of the business will pay a 50% tariff? If you can give some sense of this.
I mean, in terms of the U.S. tariff impact in Q3 is not acute. Okay? It is a small number, in terms of the number, if you look at it. But when come to the options, whatever we have it, I think the percentage of the revenues, what we are doing it, I think the options which I said earlier, we have closer than four options, which we have and which we already given it to our U.S. customers right now.
Some of them have taken those things, and they're working towards it. Probably I leave it at that point rather than sharing what are those options and all. But they are very well taken by the customers, and we are complying to the things. There is no issue with those things and all, not that shipping to somewhere else and doing. It is all as per the compliance and all. Those are the things which we are working out, and probably we won't be seeing much of those U.S. tariff impact until unless the tariffs goes further high. Otherwise, we don't see much of a challenge right now on the U.S. tariffs.
Okay, so the solution that you've given to the customers, apart from that as well, are the customers okay to pay 50% tariff even if products are shipped from India? How much of our revenues are paying 50% tariff, sir?
I think the 50% part is probably there will be a reduction, which we are suggesting to them some options there. Okay. I said they are what we are internally we are just giving to a customer. Probably with that it may not be having 50%. It will be probably coming down based on various things, which we will be working with the customers there.
Okay, understood. And sir, one follow-up question on the order inflow run rate. We were at about INR 500 crores in the first two quarters. We slipped in this quarter to about INR 400-ish. How are we looking at Q4? Given that the sales team has been buffed up, how should we look at FY 2027, given that you have taken sales team, plus you are talking about new segments, new areas of geography growth. If you can give out some guidance on what should we look at in Q4 and the next year in terms of order inflow.
Q4 will be just coming back to the numbers, what you have seen in the Q1 and Q2. Okay. We do not have any concern on the Q4 numbers in terms of order intake. As you said, with the new sales team, I think as you know, any of the sales team coming in, it will take probably a few quarters to see a contribution any of the order intake coming from them. We will be looking at those opportunities and probably going and working. It takes probably at least the first two quarters.
Okay, understood. And sir, if we continue to be at this order run rate, we will close the year with a healthy order book. Assuming that our orders get shipped in 15-16 months, is it right to assume a 20%-25% growth in FY 2027?
Yes, absolutely, there is no doubt on that one, Deepak.
Okay, got it. Last question. Since you are taking efforts on the sales team enhancement and some technology-related costs, will this come on our way of double-digit margin aspiration that we have, or the orders are very high in margins to take care of these costs?
Absolutely. That is what I earlier also mentioned. You will be seeing good healthy margins, double-digit margins like what we have seen in the Q3 here. I think we will be seeing slightly more than that in Q4 and probably also in FY 2027.
Understood. Thank you, sir. All the best. I will come back in the queue.
Thank you, Deepak.
Thank you. Next question is from the line of Aryan Bhatia from Inved Research . Please go ahead.
Thanks for the opportunity. My first question is regarding on Build to Print percent, Build to Spec mix in Q3 FY 2026.
I think the Build to Spec is closely around 6%-7% in FY 2026, and we expect that definitely will grow to a double-digit number in FY 2027.
Sorry, sir, if you can come again, I was not able to hear you.
FY 2026, you asked about the BTS revenue, correct?
No, I am asking about the mix of Build to Print in Q3 FY 2026 revenue versus and Build to Spec mix.
Yeah.
Build to Print versus Build to Spec.
Yeah, I think that is what he answered. The Build to Spec revenue is about 6% to 7% in the current year, and we expect to go to double digit in the next year. Hopefully, I have answered the question.
This will be the reason that will drive the margins in FY 2027.
Yes.
Or it will be more industrial mix.
I think FY 2027, we'll be seeing slightly a double-digit number there. But as I said, FY 2028 onwards, we will be seeing a good growth in the BTS and also the margins going up because of these BTS programs coming up in FY 2027.
The increase in the margin will be due to the industry mix change or will be due to the Build to Spec versus Build to Print mix change?
Both. It will be both, rather the mix and also the BTS.
Okay. In FY 2027, the Build to Spec mix will be more than 10%. Am I right, sir?
Sorry, just can you repeat that one?
In FY 2027, the Build to Spec mix will be more than 10%, and will it be driving the gross margin difference in Build to Print versus Build to Spec?
Yeah. I think that's it. Yes, Aryan.
Aryan?
Hello. I think we have answered.
We have answered the question, yeah.
Okay. Aryan, you're through with your questions, right?
Yes. Thank you.
Okay. Thank you. Ladies and gentlemen, we will take that as the last question for today. I now hand the conference over to Mr. Krishna Bodanapu for closing comments. Over to you, sir.
Thank you very much, and thanks everybody for participating in this call today. I do want to highlight or just summarize a few things. I think what Rajendra and R.M.S have said. The momentum is very strong behind us. This was a tough quarter, and as we had said last quarter also that this would continue to be a tough quarter. From Q4 onwards, we will see, of course, not only quarter-on-quarter growth, but the year-on-year growth. Further, and more importantly, the margins will sustain in the 10% range. To Rajendra's point, in spite of the investments that we are making in sales, leadership, et c, we are still very confident based on not only the order book that we have built, but also the kind of industries that we are going after, etc .
All in all, I believe the worst, if I may, is behind us, at least from a revenue perspective. Obviously, from a margin perspective, we have been doing quite well for the last few quarters. Also from a cash position perspective, we have been doing quite well, and we will have a fairly strong net positive year from a cash perspective. Taking all this into account, we strongly believe that we are now well-positioned for a strong Q4, but more importantly, for a very strong FY 2027 and beyond. Thank you for all the support, and we look forward to being in touch, and we will speak again at the end of next quarter's earnings presentations. Thank you.
Thank you, sir. On behalf of Cyient DLM Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.