Cyient Ltd Management Discussions

Industry Outlook

Global Economic Landscape

The global economic landscape in FY26 remained shaped by an uneasy balance between moderating inflation and renewed geopolitical risk, with global GDP growth projected to ease to ~3.1% in CY2026 and downside scenarios pointing to as low as 2.5% if the Middle East conflict escalates further. Persistent supply-chain reconfiguration around nearshoring, friendshoring and "China+1" continued to favour India as a preferred relocation geography, while a recalibrated U.S. tariff regime added a fresh layer of trade-policy uncertainty.

Within this macroeconomic context, Cyients Digital, Engineering and Technology (DET) segment navigated a year of continuing client caution on discretionary R&D spend, particularly in the first half of FY26, before signs of stabilisation as large-deal momentum returned in the second half. Disciplined cost management, productivity gains from Al-led engineering accelerators, and a continued focus on cash conversion enabled the company to defend margins and sustain its track record of strong free cash flow generation, amounting to 124% of net profits. The carve-out of the global semiconductor business into Cyient Semiconductors Private Limited (CSPL), was substantially operationalised through FY26 — positioning the company to capture the multi-year growth wave projected to take the global semiconductor industry past US$1 trillion by 2030.

As the company looks ahead to FY27, Cyient maintains a cautious yet constructive outlook. The macro environment carries significant and persistent risks — most notably the ongoing Middle East conflict, which continues to threaten global growth, energy prices and trade flows, and the pace and shape of Al-driven productivity resets, which could compress effort-based revenue faster than outcome-based commercial models scale. At the same time, the structural tailwinds for engineering services — vendor consolidation, software-defined products, sustainability engineering, and the embedding of Al inside engineering workflows — remain firmly intact. Cyients balanced industry portfolio, geographic diversification, deep India cost-and-talent base, and sustained investments in Al engineering platforms position the company to convert these tailwinds into sustainable, profitable growth.

At the same time, the Company recognized the key challenges that accompany this transformation. Scaling Al adoption across the enterprise — and into customer engagements — requires sustained investment in reskilling, engineering platforms and proprietary accelerators, alongside a deliberate shift in commercial models from effort to outcomes.

The pace at which Al productivity gains pass through to customer pricing, the intensifying competition from Global Capability Centres, and continued wage and currency pressures remain active areas of management focus.

The Companys FY27 priorities are anchored in embracing intelligence - across engineering, delivery and operations to multiply value for customers - and include:

• Accelerating large-deal momentum through deeper engagement with strategic accounts and disciplined cross-sell across verticals

• Embedding intelligence into the engineering core through proprietary Al accelerators, partnerships and platform- based delivery

• Strengthening global delivery and talent capabilities to support long-term scalability

Cyient enters FY27 with a strengthened foundation and a clearly articulated roadmap designed to accelerate value creation for customers and stakeholders through innovation, agility, and executional excellence.

Engineering, Research & Development (ER&D) Outlook

The global Engineering, Research and Development (ER&D) spend continues to expand at a healthy mid-to-high singledigit pace, with high-impact technology areas - the embedding of Al, cloud, software-defined products and digital twins into the engineering core - emerging as the fastest-growing and largest layer of this spend. lndia continues to consolidate its central role in the global ER&D value chain, with scale, depth of talent and a fast-growing Global Capability Centre footprint together reinforcing its position as the partner of choice for global engineering programs.

A defining shift in the industry is the move from point engineering engagements to Lifecycle Engineering, with customers increasingly looking to partners to own the product journey from concept and design through development and validation to sustaining and aftermarket. Combined with adjacencies in software-led engineering, Al engineering platforms and embedded intelligence across the engineering stack, this is expanding the Companys total addressable market and creating room for deeper, multi-year engagements with anchor customers.

The primary growth impetus in FY27 will come from the industrialisation of Al in engineering workflows, the shift to software-defined products across mobility, medical devices, industrial and aerospace platforms, and the rise of sustainability and decarbonisation engineering as a discrete revenue line. Alongside, customers are consolidating their ER&D vendor base in favour of fewer, deeper strategic partners with multi-domain depth and proven AI-engineering capability — driving renewed large-deal momentum. With a strong and balanced portfolio of focus industries and offerings, and a clear commitment to embracing intelligence at the heart of its engineering proposition, Cyient is well-positioned to participate in this multi-year growth cycle while remaining vigilant on near-term margin pressures and the pace of AI- driven productivity reset.

Business Unit Outlook

Cyient operates through a balanced portfolio of industry verticals that collectively address some of the most consequential structural shifts in the global economy — from defence preparedness and energy transition to software- defined mobility and digital health. A high-level outlook for each is summarized below.

Transportation

The commercial aerospace sector continued its strong recovery through FY26. Global passenger traffic grew ~ 6% and healthy airline profits are funding a robust cycle of fleet renewal and digital investment. That said, near-term demand is likely to see some moderation, with the ongoing conflict in the Middle East reducing flying hours and disrupting key international corridors. OEMs are working through an order backlog of nearly a decade, even as supply-chain constraints and geopolitical instability causing slow delivery ramp-up. With fleets ageing and utilization high, the global MRO market is on track to reach ~US$135 billion by 2030, sustaining strong demand for engineering services across repair engineering, fleet management, reliability, technical publications, cabin modification, and digital MRO.

The defense segment registered its strongest uptick in over a decade, anchored by geopolitical risk and a structural rearmament cycle. NATO members have committed to defense-and-resilience spend approaching 5% of GDP over the next decade, while other large economies, including India, are recording double-digit budget increases and a rising share of indigenous procurement, creating a long demand backbone across platform modernization and sustainment. In parallel, rail is in a sustained investment cycle - accelerated rollout of next-generation digital signalling, and continued spend on rolling-stock renewal, electrification, and freight digitization - opening a multi-decade engineering pipeline.

Persistent challenges remain - constrained supplier capacity, skilled-workforce shortages, and extended lead times. In response, OEMs and tier-1 suppliers are accelerating investments in digital threads, AI-enabled design and certification automation, and connected factory platforms - embedding intelligence across the design-to-sustainment lifecycle.

Cyient is positioned across the transportation value chain with security-cleared facilities to support a diversified OEM, defense- prime, MRO and rail customer base; and a differentiated Build- to-Specification (B2S) capability. The FY27 strategy is anchored in scaling AI-led engineering accelerators, deepening B2S and aftermarket franchises, expanding into sustainable propulsion and digital rail signaling, and capturing a larger share of indigenous defense- and rail-modernization pipeline.

Networks & Infrastructure

Networks and utilities are converging around a common reality: the worlds critical networks — telecom, electricity, water, and gas — are simultaneously being digitized, decarbonized, and made more intelligent. The differentiator for the next decade is no longer connectivity alone, but how intelligently networks are planned, modernized, and run.

In communications, the market remains selective and investment-led, with operators continuing to deploy capital with discipline. Beneath that discipline, however, a clear structural shift is underway towards AI-driven network modernization, autonomous networks, cognitive network operations centers, and intelligent operations. Fiber continues to be the foundational layer of the connectivity stack, with sustained demand driven by broadband expansion, data center connectivity, and copper / wire-center retirement programs. Several adjacent trends are accelerating this shift— 5G moving into commercial deployment, AI workloads driving steep growth in network traffic, and private wireless networks scaling rapidly across manufacturing, logistics, and energy.

In utilities, the electric grid has emerged as the bottleneck of the energy transition, with grid investment now growing faster than the spend on new power generation capacity, across most advanced economies. This is driving a sustained cycle of investment in modernizing transmission and distribution networks, upgrading control systems, automating the grid edge, and rolling out smart metering. Increasingly, utilities are converging toward software-defined, data-driven, and AI- assisted grid operations, where spatial intelligence — maps, geospatial data, AI-enabled location analytics, and digital twins of networks — has become foundational to planning, reporting, resilience, and sustainability initiatives.

Cyient is distinctively positioned at the intersection of these shifts, with a differentiated proposition built around Intelligent Network Modernization — combining deep network engineering, AI-led automation, geospatial intelligence, and operational transformation. Our positioning is anchored in engineering DNA and domain depth, and reinforced by sustained investments in digital twins, AI-led simulations, geospatial analytics, data management, and intelligent operations — capabilities that set us apart from traditional IT-led transformation narratives. We help customers augment their operations through AI-led automation and decision

intelligence, where intelligent systems handle the routine and the predictable, freeing people to focus on the judgement-led decisions that critical networks demand.

Looking ahead, the long-term demand drivers across telecom and utilities remain firmly intact. At the same time, customers are staying disciplined on capital allocation and are prioritizing transformation programs that deliver measurable business outcomes. We see this environment playing to Cyients strengths — domain depth, engineering rigor, and the ability to translate AI and digital ambition into operational impact — and providing a strong runway for continued growth in this segment.

Strategic Units

Energy

The energy sector is at the center of one of this decades most consequential structural shifts. The global energy transition — large-scale renewables, the revival of nuclear, grid modernization, and continued investment in conventional energy infrastructure — is converging with a new wave of demand from AI and hyperscale data centers, whose power requirements are reshaping the load profile of every major economy. Together, these forces are driving a structurally expanding capital-expenditure cycle across Oil & Gas, Nuclear, Renewables, power generation, and OEM ecosystems. Cyient is distinctively positioned for this opportunity - combining deep domain credentials, close proximity to our customers, and best-cost-country scale, enabling us to deliver differentiated value to energy customers globally.

By its very nature, the energy business is project-led, and its rhythm reflects deal timing, client budgets, and execution cycles. Geopolitical developments can quickly shape that rhythm, as customers defer fresh capex decisions and pause ongoing projects. FY26 performance in this segment was impacted by the completion of a large program with delayed backfilling, and more recently by the impending conflict in the Middle East, which has caused several customer decisions to be deferred and projects to be paused. We expect this environment to persist until the regional situation normalizes; equally, we believe the recovery cycle in energy is typically short, and the eventual restoration of activity — including post-conflict reconstruction spend — should bring meaningful upside.

In parallel, we are deliberately broadening the foundations of the business — building pipeline across North America, India, and the wider Asia region to diversify our geographic mix, and developing new annuity-style offerings to balance project-led lumpiness with more predictable, recurring streams. These actions are designed to make our Energy business more resilient through cycles, while preserving full exposure to its structural upside.

Mining & Minerals

The global mining and minerals industry is undergoing a fundamental reshaping. For much of the past century, iron ore defined where value sat in mining — the backbone of industrialisation, the commodity that built cities, infrastructure, and economies across the developing world. That era forged the operational scale, logistics mastery, and processing discipline that modern mining is built upon. Today, the baton is passing. The energy transition has elevated critical minerals to the centre of national and corporate strategy, while gold continues to assert its role as a store of value and a hedge against the very geopolitical instability now accelerating investment across the sector. Supply security concerns are directing capital at pace into new mines, processing capacity, and supply chain resilience — and as the world looks further ahead, the resource frontier is expanding. Iron ore remains foundational — steel underpins the energy transition itself — but the industrys centre of gravity is shifting, and the companies that move with it will define the next generation of mining value. These are not cyclical tailwinds.

Cyient is built for precisely this moment. Copper — the backbone of electrification — is seeing demand trajectories that require not just new supply, but smarter, faster, more productive operations. Gold producers face their own transformation imperative: cost discipline, reserve extension, and operational efficiency in increasingly complex geologies. And the iron ore majors — having spent decades optimising at extraordinary scale — are now channelling that operational DNA into autonomous haulage, Al-driven processing, and digital twin environments, setting the benchmark for what industrial mining transformation looks like. Across established commodities and the emerging resource base alike, customers are investing in legacy modernisation, autonomous operations build-out, and productivity transformation through digital and AI technologies.

Our depth in Mining & Minerals — anchored in a consulting- led model that engages customers strategically, not just operationally — sets us apart. What further stands out is the velocity of AI adoption among our mining customers, moving faster than anticipated, driven equally by operational urgency and the maturity of scalable technologies now available. This acceleration validates our consulting-first posture and reinforces the scale of the growth opportunity before us. Mining & Minerals is a growth engine for Cyient — and we intend to press that advantage. From the iron ore foundations that shaped the modern industry, through the copper and gold operations driving todays transformation, to the critical and future-facing resources that will define the decades ahead, value in mining is continuously being rewritten. Our domain depth, our consulting and services mindset, and our established customer relationships position us to grow notjust with the industry, but ahead of it — as the strategic partner of choice as mining companies modernise for the decade ahead.

Automotive

The global automotive industry continues to navigate a prolonged downturn, shaped by two structural forces. The first is intensifying competition from Chinese OEMs, whose scale, cost position, and rapid product cycles are reshaping competitive dynamics across both passenger vehicles and electric mobility. The second is a recalibration of sustainability and electrification timelines in major economies, like the United States, where shifting policy priorities have slowed near-term EV adoption and prompted established OEMs to re-phase capital plans. We anticipate this climate to prevail through much of FY27, with customer spending in passenger automotive remaining measured.

The picture is meaningfully different in Trucks & Off-Highway (T&OH), where the demand drivers are more durable. Customers across commercial vehicles, construction, and agricultural equipment continue to invest in three structural priorities — cost-down engineering to protect total cost of ownership, electrification of fleet and equipment segments where the economics are increasingly favourable, and the migration to software-defined vehicle (SDV) architectures, which is reshaping the electronic and software content of every new platform. These trends, particularly SDV and the consolidation of vehicle computing, are generating sustained, multi-year engineering and electronics demand.

Cyient is well positioned across both ends of this spectrum. Our deep mobility domain expertise, established customer relationships, and best-cost-country delivery enable us to support OEMs and Tier-1 suppliers through the current passenger-automotive reset, while expanding our share in the more resilient T&OH segment. Through the cycle, our focus remains on partnering with customers on the high-value electronics and engineering work — in SDV, electrification, and cost transformation — that we believe will define the next generation of vehicles.

Healthcare and Life Sciences

The global healthcare and life-sciences industry continued its rapid evolution through FY26, with investment broadening beyond connected medical devices into AI-enabled diagnostics, remote patient monitoring, digital therapeutics, and hospital-at-home models. The AI in medical devices market is estimated to grow at a CAGR of ~28%, reaching $40 billion by 2030, underscoring the structural shift toward intelligence-led healthcare technology. On the regulatory side, evolving frameworks for AI/ML-enabled medical devices, software-as-a-medical-device (SaMD), and connected-device cybersecurity are reshaping market-access requirements across major geographies, raising the bar on quality, assurance, and lifecycle management. Together, these forces are accelerating both the pace of new-product innovation and the urgency of modernizing the legacy platforms that anchor core revenues for global medical device OEMs.

Against this backdrop, Cyients healthcare and life-sciences business sharpened its focus in FY26 around three priorities — end-to-end product lifecycle engineering across R&D, quality, regulatory, supply chain, and manufacturing; new product acceleration aligned with the pace of technology evolution; and enabling new digital revenue streams from the data our customers already own. This reflects how global medical device OEMs are simultaneously trying to bring new innovations to market faster, take a longer view of their installed base, and unlock fresh value from data and software-led services.

Looking ahead to FY27, Cyient expects this momentum to continue, anchored in embracing intelligence across predictive engineering, regulatory intelligence, and hyperpersonalization.

Risk Management

Our Approach to Risk Management

Cyient operates in a dynamic global environment where geopolitical, technological, regulatory, and climate-related shifts are reshaping how our clients invest and operate. As a global engineering and technology services partner serving regulated industries — aerospace, transportation, energy, communications, semiconductors and healthcare — resilience is integral to the trust our clients place in us.

Our Enterprise Risk Management (ERM) framework is designed to anticipate, assess and respond to these dynamics while protecting business continuity and shareholder value. It links risk identification to mitigation ownership, control effectiveness, and Board-level oversight, with the goal of building a risk-aware culture across all business units and geographies.

Risk Governance at a Glance

Cyients Enterprise Risk Management (ERM) framework is anchored by the Boards Risk Management Committee and operates on a three-lines-of-defense model. Business units own and manage risk at the first line; specialist functions (Compliance, Information Security, Finance, ESG) provide oversight at the second line; and Internal Audit provides independent assurance at the third line.

Risks are reviewed on a half-yearly cadence using a heat-map (likelihood * impact), with key risk indicators (KRIs) tracked against defined thresholds. Mitigation effectiveness is reported to the Risk & Audit Committee and integrated with strategic planning and capital allocation decisions.

Key Risks & Mitigation Strategies

The table below summarizes the principal risks that Cyient monitored in FY26, the underlying business environment drivers, and the mitigation strategies in place. The risks are reviewed half yearly; their relative materiality may shift as macro and industry conditions evolve.

Key Risks and Mitigation Strategies

Risk	Risk Description	Mitigation Strategy
Geopolitical & Macroeconomic Volatility	Tariff changes, trade restrictions, regional conflicts (Russia-Ukraine, Middle East, Indo-Pacific), and economic slowdowns in key markets can reduce client spending, delay project awards, and disrupt international delivery.	Diversified revenue across geographies; scenario-based planning; delivery options in North America, Europe and Australia; flexible contract structures (time-and- materials or fixed price); active monitoring of trade sanctions and export restrictions.
Client & Vertical Concentration	Dependence on top accounts or a single vertical (e.g., Aerospace, Communications) exposes revenue to client-specific program cycles, M&A activity, or budget cuts.	Account diversification targets; cross-selling engineering, digital and manufacturing services across accounts; expansion into adjacent verticals (semiconductors, sustainability, healthcare); long-term master service agreements with key clients.
Cybersecurity & Data Privacy Breaches	Increasing cyber threats — including ransomware, supply-chain attacks, insider threats, and AI-assisted phishing — combined with the responsibility of safeguarding client intellectual property, source code, and personal data under applicable privacy and data protection laws.	Information security controls aligned to globally recognized standards; round- the-clock security monitoring and threat detection; strict access controls ensuring users access only what they need; data loss prevention tools; regular cyber incident simulations; cyber insurance coverage; mandatory annual security awareness training for all employees; and a defined policy for secure use of AI tools.
Talent Attrition & Skill Obsolescence	Competitive technology talent market, combined with rapid advances in AI, cloud and engineering disciplines, risks outpacing the skills available internally	Structured learning academies and certification pathways in AI, cloud and engineering; competitive employee value proposition including career growth frameworks, employee stock options and wellness programs; succession planning for critical roles; active campus and lateral hiring; data-driven employee retention tracking.
Technology Disruption (GenAI & Automation)	GenAI and low-code platforms may compress traditional engineering and IT services pricing, shift client buying patterns, and reshape the competitive landscape.	Investment in proprietary AI tools and software-led solutions; shift toward outcome-based pricing models; partnerships with leading cloud and AI platform providers; internal use of AI productivity tools to improve efficiency; continuous renewal of service offerings.
Business Continuity & Operational Resilience	Pandemics, natural disasters, prolonged power or network outages, civil unrest, or facility incidents at major delivery centers (Hyderabad, Pune, Bengaluru, global hubs) can disrupt delivery commitment to clients	Business continuity programme aligned to international standards; delivery spread across multiple sites to prevent singlepoint failure; tested remote-working capability; annual disaster recovery drills with defined recovery time targets; backup data centers with cloud failover; pandemic response playbook; crisis management committee.
Foreign Exchange Volatility	Majority of revenue is denominated in USD, EUR, GBP and AUD while a large share of cost base is in INR; sharp currency swings can impact reported margins	Board-approved currency hedging policy using forward contracts and options; natural offsets through local-currency delivery costs; price escalation clauses in long-term contracts; monthly treasury reviews of currency exposure.
Regulatory & Compliance Risk	Rapidly evolving global regulations - covering cross-border data transfers, export controls on defence and dualuse technology, sustainability disclosure requirements, and international tax rules — increase compliance complexity across jurisdictions.	Centralized compliance function with entity-level controls in each country; data localization measures for regulated data; export classification reviews; readiness programs for sustainability reporting obligations; external audits; Board-level Risk and Audit Committee oversight.
Climate & ESG Risk	Physical climate risks (water stress at facilities, extreme weather) and transition risks (carbon pricing, client decarbonization mandates) can affect operations and competitiveness.	Science-based net-zero roadmap with defined interim targets; renewable energy procurement agreements; green campus initiatives; sustainability engineering services offered to clients; climate- related financial disclosures; sustainability performance linked to leadership goals.
Intellectual Property & Contractual Risk	Risk of unintentional leakage of client intellectual property, violation of open-source software license terms (particularly with AI-generated code), and exposure to excessive liability or indemnity obligations in client contracts	Open-source software governance with automated license scanning; standard contract templates with liability caps; controls to track the origin of AI-generated code; strict separation of client project environments; intellectual property clearance reviews; mandatory legal sign-off above defined contract value thresholds.
Reputational Risk	Adverse social media events, client disputes, ESG controversies, or data incidents can damage brand equity and erode talent and customer trust.	Proactive corporate communications; ethics and whistleblower mechanisms; customer NPS programs; transparent ESG reporting; crisis communication protocols; periodic stakeholder engagement.
Digital Personal Data Protection (DPDP) Act Compliance Risk	Indias Digital Personal Data Protection (DPDP) Act, 2023 places obligations on Cyient to manage personal data responsibly — including obtaining valid consent, limiting data use to stated purposes, storing data within India where required, and honoring individuals rights to access, correct or delete their data. Non-compliance carries penalties of up to Rs.250 crore per violation, and data breaches must be reported to the regulator within 72 hours. Rules are still being finalized, adding uncertainty for operations involving cross-border data transfers.	Cross-functional steering committee (Legal, Compliance, IT, HR) overseeing DPDP implementation; appointment of a Data Grievance Officer; consent management platform being evaluated to record and manage individuals data preferences; mapping of personal data flows across internal systems and third- party vendors; data agreements being put in place with all vendors handling personal data; privacy impact assessments for high- risk data processing activities; periodic internal privacy audits; and role-based data privacy training for employees.

Looking Ahead

FY27 will be shaped by continued geopolitical uncertainty, accelerating adoption of AI, tightening global regulations on data and sustainability, and a heightened focus on operational resilience. Cyients ERM framework, combined with disciplined execution, diversified delivery footprint and continued investment in talent and IP-led solutions, positions the Company to navigate these dynamics while delivering sustained value to all stakeholders.

Group Revenue

During the year, the Group revenue has witnessed a de-growth of 1.3% in rupee terms.

Over the last ten years, the Group has sustained robust revenue growth momentum with annual growth rate (CAGR) of 8.1%. The revenue growth demonstrates resilient and relevant proposition amongst its clients across a wide portfolio of segments and geographies.

DET:

The Digital, Engineering & Technology (DET) segment has witnessed a growth of 5.5% in rupee terms, driven primarily by the strategic units and networks and infrastructure business units.

Over the last year, DET has sharpened its go-to-market approach and deepened digital and AI capabilities. DET segment has delivered steady momentum across all key sectors throughout the year, closing the year with positive year-on-year growth in order intake and a strong pipeline underpinning future revenues. Cyient DET remains focused on strengthening execution rigor while continuing to invest in a domain-led, AI-enabled portfolio to drive scalable growth and long-term value creation.

DLM:

DLM revenue has declined by 17% year on year in rupee terms, primarily due to the completion of a large order in the Defense segment in the preceding financial year. Excluding the Defense segment, all other industries recorded year on year growth, reflecting the underlying strength and diversification of the business.

Semiconductors:

The Semiconductors segment saw a de-growth of 24.1% in rupee terms, driven primarily by our deliberate strategic shift from digital ASIC to an Analog/Mixed Signal focus, which weighed on near-term revenues; this was compounded by tariff-related challenges that affected certain automotive customers, leading to program cancellations and reduced demand. Despite lower revenue, FY26 was a year of foundational building — sequential revenue growth every quarter, deepening IP, and assembling the people, partnerships, and platforms to build on. Strengthening ASIC, investing in ASSP, and acquiring Kinetic Technologies make us Indias largest custom chip company, setting the foundation for consistent, profitable growth.

Revenue by Geography

During FY26, the Group delivered a growth of 16.9% in the North America region, a de-growth of 0.7% in the EMEA region, and de-growth of 29% in the Asia Pacific, including the India region in Rupee terms.

Revenue by Operating Segments

Segment information is presented for the "consolidated financial statements" as permitted under the Ind AS 108 "Operating Segments". The Chief Operating Decision Maker ("CODM") reviews the business as four operating segments - "Digital, Engineering & Technology" (DET), "Design Led Manufacturing" (DLM), "Semiconductors" and "Others".

Effective April 01, 2025, in line with the Board approval, the Group has re-organized its business structure by restructuring its global semiconductor business under Cyient Semiconductors Private Limited, its subsidiaries and an associate. Consequent to such change, the global semiconductors business, which was hitherto reported under the Digital, Engineering & Technology (DET) segment, has been presented as a separate reportable segment, consistent with the manner in which the Chief Operating Decision Maker (CODM) reviews the business.

The CODM reviews the business across four operating segments:

Digital, Engineering & Technology (DET) segment consists of Groups business of engineering solutions across multiple industries including Transportation & Mobility (such as Aerospace, Rail & Automotive), Networks & Infrastructure (such as Connectivity and Utilities) and Strategic units (such as Mining & Minerals, Energy, Healthcare & Lifesciences).

Design Led Manufacturing (DLM) segment consists of Groups business of Electronics Manufacturing Services.

Semiconductors segment consists of Groups business of design, development and supply chain management of semiconductor chips.

Others segment consists of Groups other business operations which includes Aerospace Tooling division.

During the year, the DET segment has witnessed a growth of 5.5% in rupee terms, the DLM segment has seen a de-growth of 17.0% in rupee terms and the Semiconductors segment has seen a de-growth of 24.1% in rupee terms.

Note: The above number are after eliminating the intersegment transactions.

Better Customer Mining

The Group continues to stress improving revenue per customer by focusing on strategic customers and generating more up-sell and cross-sell opportunities. The contribution from the top customers in FY26 has been slightly higher than previous years given the evolving and variable demand cycles and cash spends across Cyients key customers at the back of the prevalent macro-economic and geo-political uncertainties across the segments.

The chart below depicts the contribution of revenue from the top 20 customers over the last five financial years in the DET segment:

Profits Trend

The decrease in net profit in FY 26 is primarily attributable to one-off items such as impact of labour code of Rs. 423 Mn, impairment of goodwill of tooling business of Rs. 278 Mn and legal, professional and due diligence expenses of Rs. 712 Mn incurred towards proposed acquisition which did not proceed.

Note: Profit after tax numbers presented above are before share of non-controlling interest.

Note: Profit before tax numbers presented above are post share of loss from associate.

Free Cash Flow (FCF) Generation

The Group has achieved significant improvement in the free cash flow (FCF) generation.

In FY26, the Group generated FCF of Rs. 6,930 Mn as against Rs. 6,878 Mn in FY 25. The Groups FCF to PAT conversion improved from 105% in FY 25 to 150% in FY 26 due to its continued focus on efficiency of cash collection and prudent working capital management.

{PAT considered for FCF conversion is profit of the Group attributable both Parent and Non-Controlling interest}

Days Sales Outstanding

The Group has delivered Days Sales Outstanding (DSO) of 88 days as of March 31, 2026, and 86 days as of March 31, 2025, primarily driven by increase in DSO in DET segment.

Tax Rate

The effective tax rate of the Group has increased from 25.9% in FY25 to 28.2% in FY26, on account of certain one-time tax impacts considered in the current financial year.

Capital Expenditure

The Group has incurred capital expenditure of Rs. 944 Mn in FY 26 (1.3% of the total revenue), as compared to Rs. 1,021 Mn in FY 25. (1.4% of the total revenue).

Net Worth

The net worth of the Group has grown at 15.8% CAGR in the last six years from Rs.29,541 Mn to Rs.61,633 Mn. It is mainly attributed to the profitable growth over the years, driven by organic and inorganic initiatives.

Return to investors

• During the current year, the Company has paid interim dividend of Rs. 16 per share.

• In addition, the Board of Directors has approved the buyback proposal for purchase by the Company of up to 6,400,000 equity shares of Rs. 5 each (representing 5.76% of the total paid-up equity share capital) from the eligible equity shareholders of the Company other than promoters, promoter group and persons who are in control of the Company on a proportionate basis, by way of a tender offer, at a price of Rs. 1,125 per equity share, for an aggregate amount not exceeding Rs. 7,200 Mn, in accordance with the applicable provisions of the Securities and Exchange Board of India (Buy-back of Securities) Regulations, 2018, the Companies Act, 2013, and the rules made thereunder.

• The dividend payment trend of the Group has improved substantially in the last five years from Rs. 17 per share in FY 21 to Rs. 26 per share in FY 25.

• The highest-ever dividend of Rs. 30 per share was declared in FY24.

• The dividend payout for the Company stands at 45% in FY25.

Market Capitalization

• The Group has demonstrated significant value creation for its investors over the last seven years translating to a market cap expansion from Rs. 25,216 Mn at end of FY20 to Rs. 83,661 Mn at the end of FY26.

• The dividend payout has improved from 25% in FY14 to 38% in FY26.

Financial Performance for the Year 2025-26 (Consolidated)

This part of the Management Discussion and Analysis refers to the consolidated financial results of Cyient Limited ("the Company") and its subsidiaries, associate and joint venture, referred to as "the Group." The discussion should be read in conjunction with the consolidated financial statements and related notes to the consolidated accounts of Cyient Limited for the year ended March 31, 2026.

Consolidated Financial Results

Particulars	Year Ended March 31, 2026		Year Ended March 31, 2025
	Rs. Mn	% of Revenue	Rs. Mn	% of Revenue
Income
Revenue from contracts with customers	72,682	100%	73,604	100%
Other income	1,772	2.4%	966	1.3%
Total income	74,454	-	74,570	-
Expenses
Employee benefits expense	40,340	55.5%	36,899	50.1%
Cost of materials consumed	8,128	11.2%	11,357	15.4%
Changes in inventories of finished goods, stock-in-trade and work in progress	(266)	(0.4%)	33	0.0%
Operating, administration and other expenses	15,098	20.8%	13,882	18.9%
Impairment of non-current assets	278	0.4%	-	-
Finance costs	608	0.8%	928	1.3%
Depreciation and amortisation expense	2,782	3.8%	2,672	3.6%
Total expenses	66,968	92.1%	65,771	89.3%
Profit before tax (before share of profit/(loss) from joint venture, associate and non-controlling interest)	7,486	10.3%	8,799	12.0%
Share of loss from Joint Venture and associate	(113)	(0.2%)	(49)	(0.1%)
Profit before exceptional items and tax (before non-controlling interest)	7,373	10.1%	8,750	11.9%
Exceptional items	(928)	(1.3%)	-	-
Profit before tax	6,445	8.9%	-	-
Tax expense	1,815	2.5%	2,267	3.1%
Profit after tax (before non-controlling interest)	4,630	6.4%	6,483	8.8%
Share of non-controlling interest	351	0.5%	326	0.4%
Net Profit attributable to the shareholders of the Company	4,279	5.9%	6,157	8.4%

ANALYSIS

Revenue

During FY 26, the Group revenue has de-grown by 1.3% in rupee terms as compared to FY 25.

• The Digital, Engineering & Technology (DET) segment witnessed a growth of 5.5% in rupee terms.

• The DLM segment witnessed a de-growth of 17.0% in rupee terms.

• The Semiconductors segment witnessed a de-growth of 24.1% in rupee terms.

Other income

Other income for FY26 was Rs.1,772 Mn as compared to Rs. 966 Mn in FY25. Increase is on account of the following reasons:

• Increase of Rs. 558 Mn is on account of realized and unrealized foreign exchange gain due to rupee depreciating against currencies such as USD, EUR and GBP.

• Treasury income is higher by Rs. 165 Mn due to efficient and effective utilization of surplus cash.

• Increase on account of net movement in fair valuation of financial assets in FY 26 by Rs. 129 Mn.

Employee benefits expense

Employee benefits expense includes salaries that have fixed and variable components, contributions to retirement and other funds, and staff welfare expenses.

Employee benefits expense as a percentage of the revenue from operations stands at 55.5% for FY26 compared to 50.1% in FY25. In value terms, employee benefits expense has increased by Rs. 3,441 Mn in FY26 compared to FY25 due to an increase in headcount globally (from 16,722 on March 31, 2025, to 17,066 on March 31, 2026) and annual salary hikes.

Operating, Administration, and Other Expenses

Particulars	Year Ended March 31, 2026		Year Ended March 31, 2025
	Rs. Mn	% of revenue	Rs. Mn	% of revenue
Rent	244	0.3%	199	0.3%
Travelling & Conveyance	1,463	2.0%	1,320	1.8%
Subcontracting charges	5,987	8.2%	5,216	7.1%
Repairs and maintenance	2,431	3.3%	2,379	3.2%
Other expenses	4,973	6.8%	4,768	6.5%
Total	15,098	20.8%	13,882	18.9%

• Subcontracting charges have increased in line with the business requirements.

• Repairs and maintenance expenses and travel expenses have marginally increased during the year.

• Increase in "other expenses" is on account of expected credit loss (ECL) provision for trade receivables & contract assets by Rs.590 Mn offset by decrease in legal and professional charges by Rs.241 Mn.

Finance costs

Finance costs have decreased from 1.3% in FY 25 to 0.8% in FY 26 as a percentage of revenue. The Group, through its efficient cash management framework, has managed to retire its longterm debts through FY26 in DET segment, which has resulted in decrease in finance costs.

Depreciation and amortization expense

During FY 26, depreciation and amortization expense increased by 110 Mn from Rs. 2,672 Mn (3.6% of revenue) in FY 25 to Rs. 2,782 Mn (3.8% of revenue) in FY 26, in line with the business requirements.

Tax expenses

The Groups effective tax rate has increased from 25.9% in FY25 to 28.2% in FY26 due to certain one-time tax impacts considered in the current financial year.

Net profit attributable to the shareholders

The net profit stands at Rs. 4,279 Mn for FY26 as compared to Rs. 6,157 Mn in FY25.

Decrease in the net profit of Rs.1,878 Mn in FY 26 as compared to FY 25 is attributable to the following reasons:

• An amount of Rs. 712 Mn (DET Segment) incurred towards professional, legal and due diligence expenses in relation to a proposed acquisition transaction, which did not proceed.

• The Company has recognized one time impact of Rs. 423 Mn on account of implementation of new labour code during the year (DET Segment: Rs. 399 Mn, DLM Segment: Rs. 16 Mn, Semiconductors Segment: Rs. 8 Mn).

• Based on impairment assessment performed during the year, an amount of Rs. 278 Mn has been accounted towards impairment of goodwill in tooling business.

Consolidated Balance Sheet as at March 31, 2026

		Rs. Mn
Particulars	As of March 31, 2026	As of March 31, 2025
ASSETS
Non-current assets
- Property, plant and equipment (including ROU & intangible assets)	11,174	12,036
- Goodwill	19,717	18,040
- Investment accounted for using the equity method	499	563
- Non-current investments	1,981	2,798
- Deferred tax assets (net)	1,838	861
- Other non-current assets	1,373	1,193
Total-non-current assets	36,582	35,491
Current assets
- Inventories	6,528	5,766
- Current investments	2,094	1,654
- Trade receivables	13,055	14,067
- Cash and bank balances	15,063	13,142
- Other current assets	9,922	6,826
Total - Current assets	46,662	41,455
TOTAL ASSETS	83,244	76,946
EQUITY AND LIABILITIES
Shareholders funds
- Share capital	556	555
- Reserves and surplus	61,077	57,049
Total - Shareholders funds (Including non-controlling interest)	61,633	57,604
Non-current liabilities
- Long-term borrowings	778	982
- Lease liabilities	1,756	2,072
- Other financial liabilities	17	107
- Long-term provisions	2,387	1,746
- Deferred tax liabilities (net)	741	734
Total-non-current liabilities	5,679	5,641
Current liabilities
- Short-term borrowings	880	1,156
- Lease liabilities	897	924
- Trade payables	5,368	3,934
- Other current liabilities	7,157	6,332
- Short-term provisions	1,630	1,355
Total - Current liabilities	15,932	13,701
TOTAL - EQUITY AND LIABILITIES	83,244	76,946

Property, plant, and equipment (including intangible assets)

		Rs. Mn
Particulars	As of March 31, 2026	As of March 31, 2025
Property, plant and equipment	4,747	4,745
Other intangible assets	3,931	3,678
Intangible assets under development	-	714
Right-of-use assets	2,448	2,824
Capital work-inprogress	48	75
Total	11,174	12,036

Movement in Property, plant and equipment is explained below:

• Additions to property, plant and equipment and other intangible assets of Rs. 255 Mn towards computers, buildings, plant and equipment, computer software and others.

• Decrease in right-of-use assets by Rs. 376 Mn is on account of annual depreciation.

• Intangible assets under development pertain to the development cost ofsoftware dedicated to the automation, management, and monitoring of mobile networks. The same has been capitalized during the financial year.

• Depreciation and amortization expense for FY 26 was Rs. 2,782 Mn.

Goodwill

The increase in Goodwill of Rs. 1,677 Mn during FY26 represents foreign currency translation adjustments.

The Group conducts an annual impairment assessment of goodwill. Based on the evaluation of cash flow projections for the DET and Semiconductors segments and the market capitalization of DLM, no impairment indicators were identified in FY26, except for the tooling business, where an impairment charge of Rs.278 Mn was recognized.

Non-current investments

Non-current investments have decreased from Rs.2,798 Mn as of March 31, 2025, to Rs.1,981 Mn as of March 31, 2026, primarily due to redemption of the investments, fair valuation changes and reclasses from non-current to current investments, based on the maturity dates.

During the year ended March 31, 2026, changes in the fair valuation of financial instruments recognized in other comprehensive income include a Rs.207 million decline in the fair value of an investment in an IP-based communications company recognized in Cyient DLM Limited, Companys subsidiary. This decrease is mainly attributed to the extended lead time in order development and execution.

Investment in Associate

On November 29, 2024, the Company, through its subsidiary Cyient Semiconductors Inc., USA entered into a Share Purchase Agreement (SPA) with Azimuth AI Inc., USA (Azimuth) and acquired a 27.62% stake. The carrying value of the investment as on March 31, 2026, is Rs. 499 Mn (March 31, 2025, Rs. 563 Mn), decrease attributable to the share of loss pick up during the year.

Azimuth is an Embedded Silicon Product company in developing highly differentiated ASICs for Edge Computing Applications. Consequent to this acquisition, Azimuth became an Associate of the Company. The transaction has been accounted for using the equity method as per Ind AS 28.

Cash and bank balances

Total cash and bank balances consist of following:

Particulars	As of March 31, 2026	As of March 31, 2025
Cash and cash equivalents	14,575	10,706
Bank balances	488	2,436
Cash and Bank balances	15,063	13,142

During the year, the Group generated free cash flow from operations ofRs. 6,930 Mn for FY 26. The Company deploys its surplus funds in fixed deposits, bonds, mutual funds and other approved instruments in line with an approved policy.

Trade receivables

The trade receivables have decreased from Rs.14,067 Mn as of March 31, 2025, to Rs. 13,055 Mn as of March 31, 2026.

The Group DSO (Days sales outstanding) was at 88 days as of March 31, 2026, and 86 days at March 31, 2025. {DSO is arrived by considering trade receivables and contract assets}

Other current assets

Other current assets have increased from Rs.6,826 Mn as of March 31, 2025, to Rs. 9,922 Mn as of March 31, 2026, primarily due to increase in contract assets by Rs.1,828 Mn.

Share capital

The Company has only one class of shares - equity shares with a par value of Rs. 5 each. The Authorized share capital of the Company was 280,000,000 equity shares.

As at March 31, 2026, total issued, subscribed and paid-up shares are 111,126,188 of Rs. 5 each as against 111,038,924 shares as at March 31, 2025. Movement is primarily on account of exercise of the stock option by the associates of the Group under the Associate Stock Option Plans.

Reserves and Surplus

Reserves and surplus increased from Rs. 57,049 Mn as of March 31, 2025, to Rs. 61,077 Mn as of March 31, 2026, primarily due to profit generated during FY26 of Rs. 4,630 Mn.

Borrowings

The long-term borrowings decreased from Rs.982 Mn as of March 31, 2025, to Rs. 778 Mn as of March 31, 2026, due to net repayment of Rs.204 Mn during the year.

The short-term borrowings decreased from Rs. 1,156 Mn as of March 31, 2025, to Rs. 880 Mn as of March 31, 2026, due to net repayment of Rs. 276 Mn during the year.

Trade payables

Trade payables consist of payables towards the purchase of goods and services and stood at Rs. 5,368 Mn as of March 31, 2026 (Rs. 3,934 Mn as of March 31, 2025).

This includes payables to micro and small enterprises of Rs. 95 Mn as at March 31, 2026 (Rs. 84 Mn as of March 31, 2025)

Provisions

Provisions are primarily towards gratuity and compensated absences.

• Long term provisions have increased from Rs. 1,746 Mn as at March 31, 2025 to Rs. 2,387 Mn as at March 31, 2026.

• Short term provisions have increased from Rs. 1,355 Mn as at March 31, 2025 to Rs. 1,630 Mn as at March 31, 2026.

Effective November 21, 2025, the Government of India consolidated multiple existing labour laws into a unified framework comprising four Labour Codes, collectively referred to as the "New Labour Codes". In accordance with Ind AS 19 - Employee Benefits, the impact of such legislative changes is treated as a plan amendment, requiring immediate recognition of the resultant past service cost in the consolidated statement of profit and loss. The Group has assessed the impact of the changes in line with the Labour Codes, draft rules and FAQs. Based on this assessment, the Group has recognised a onetime increase in employee benefit provisions amounting to Rs. 423 Mn, which has been presented as an "exceptional item" in the consolidated statement of profit and loss for the year ended March 31, 2026.

Financial Ratios

Following are ratios for the current financial year and their comparison with the preceding financial year, along with explanations where the change has been 25% or more when compared to the immediately preceding financial year:

Sl. No Ratio Description	March 31, 2026	March 31, 2025	Variance	Explanation
1 Debtors turnover (in days)	88	86	(2%)
2 Inventory turnover (in days)	186	123	40%	Note (i)
3 Interest coverage ratio	11.0	10.1	(9%)
4 Current ratio	2.93	3.03	3%
5 Debt equity ratio	0.03	0.04	(25%)	Note (ii)
6 Operating margin (%)	11.2%	15.5%	(4.3%)
7 Net profit margin (%)	6.4%	9.0%	(2.6%)	Note (iii)
8 Return on net worth (%)	7.2%	12.6%	(4.8%)

(i) In response to customer-specific program requirements and global supply chain challenges, Cyient DLM Limited procured certain critical components in advance and entered into long-term supply commitments with key vendors. Higher inventory levels, combined with lower revenue during the year, resulted in an increase in DIO and, consequently, higher net working capital levels.

(ii) Reduction in outstanding debt through scheduled repayments reflecting in improvement in the debt equity ratio.

(iii) Decrease in the Operating profit margin, net profit margin and return on net worth is attributable to the following reasons:

a) An amount of Rs. 712 Mn (DET Segment) incurred towards professional, legal and due diligence expenses in relation to a proposed acquisition transaction, which did not proceed.

b) The Company has recognized one time impact of Rs. 423 Mn on account of implementation of new labour code during the year (DET Segment: Rs. 399 Mn, DLM Segment: Rs. 16 Mn, Semiconductors Segment: Rs. 8 Mn).

c) Based on impairment assessment performed during the year, an amount of Rs. 278 Mn has been accounted towards impairment of goodwill in tooling business.

People Practice Function

FY25-26 marked a defining inflection point in Cyients people journey. The year opened with a renewed leadership mandate under Sukamal Banerjee who joined us as Executive Director and CEO in February 2025. The leadership team has brought a sharper strategic intent to the people agenda at a moment of meaningful business transformation. Together, the leadership committed to building a workforce that could outgrow conventional limits, outthink the pace of change, and outlast competitive pressures through sustained capability and culture.

Guided by Cyients AGILE culture, our people strategy remained anchored in deepening leadership capability, accelerating technical excellence, strengthening associate well-being, and fostering an inclusive and high-performing workplace. As Cyient continues to evolve as a technology-led engineering and digital enterprise, we remain committed to creating an environment where talent can continuously learn, adapt, innovate, and deliver sustained value.

A Recognised Employer of Choice

Cyient closed the year with a regular headcount of 14,236 associates, reflecting a net addition of 459 through the year. Against this backdrop of measured growth, the organisation earned a significant recognition milestone: certification as a Top Employer in India by the Top Employers Institute, in its very first year of participation. This distinction, awarded to organisations that demonstrate excellence across hiring, learning, well-being, diversity, and associate experience, is an external affirmation of the maturity Cyient has built into its talent architecture. It reinforces the conviction that employer brand and associate experience are not peripheral to strategy; they are competitive differentiators.

Deepening Leadership and Technical Capability

Leadership development remained one of the years most consequential investments. Cyients structured academies — spanning the Business Leader Program for senior leaders stepping into enterprise responsibility, the Emerging Leader Program for high-potential managers, and Managing@Cyient for first-line managers across all geographies — completed their FY25-26 cohorts with measurable impact. Twelve percent of BLP graduates and eleven percent of ELP graduates were promoted or progressed into expanded roles within the year, demonstrating that structured development translates directly into career movement and succession readiness.

On the technical side, the Technology Leadership Program and Technology Career Path — spanning four megatrends of Digital Healthcare, Industry 4.0, Intelligent and Meta-Mobility, and Sustainability — saw strong completion rates, with 200 associates already earmarked for the next cohort.

The bench-skilling programme delivered equally strong outcomes:

• 61% of upskilled associates were redeployed into project roles

• Bench strength reduced by 33% year-on-year

• Approximately 6% attrition was avoided through proactive reskilling initiatives

At Cyient, learning is not merely a programme—it is a business and performance lever.

The year also saw peer-led knowledge exchange scale meaningfully, with TechTalk sessions engaging associates globally and over a thousand new credentials added to the certification repository.

Three industry recognitions followed: the HRAI Award for Excellence in Learning and Development, the ETHRWorld Gold Award for Excellence in Learning and Development, and a finalist placement at the SHRM Excellence Awards 2025.

An Inclusive, Engaged, and Well Organisation

Cyients DEI agenda advanced with purpose in FY26. Targeted hiring interventions drove an increase in gender diversity, particularly at lateral and mid-management levels, with cross-functional DEI teams embedding inclusion into talent processes across business units. Inclusion at Cyient is understood not merely as a cultural aspiration but as a business capability — one that sharpens innovation, enriches collaboration, and improves the quality of decisions made at every level.

Associate engagement remained robust and structured, with over 360 initiatives delivered across four pillars: Care, Celebrate, Learn and Grow, and Leadership Connect. The standout initiative of the year was One Cyient — launched in alignment with Sukamals vision for greater unity across the enterprise. The One Synergy programme embedded within it created structured opportunities for leaders and associates across functions and geographies to connect, collaborate, and engage in open dialogue, advancing a more integrated enterprise culture.

On total rewards and well-being, Cyient further strengthened its associate value proposition through several meaningful enhancements:

• Extended family medical coverage following the demise of an associate

• Waiver of hospitalisation bill deductions in the event of member death

• Ambulance expenses reimbursed on actuals

• Fully sponsored annual health check-ups for associates above 39 years of age

• Introduction of bariatric surgery coverage effective April 2026

Mental and physical well-being continued to be supported through Wellbeing Wednesdays and employee assistance programmes. These are not benefit line-items, they are signals of the kind of organisation Cyient intends to be.

In preparation for Indias new Labour Code changes, Cyient adopted a clear implementation philosophy anchored in three principles: remain compliant, protect salaries, and offer flexibility. The new compensation and benefits structure was implemented effective 1 April 2026, reflecting the organisations ability to respond proactively to regulatory change while protecting associate interests.

The strength of Cyients total rewards approach was recognised externally through the Excellence in Total Rewards and Employee Value Proposition 2026 award by ETHCA and the Excellence in Compensation & Benefits Strategies 2025 award by HRAI

Looking Ahead

As Cyient advances as a technology-led engineering and digital enterprise, the people function enters FY26-27 with clear ambition, to build on the foundations laid this year with greater velocity, deeper capability, and a more connected, purposeful associate experience.

The work ahead is not simply to sustain momentum. It is to ensure that as Cyient grows, its people grow with it, and that every associate, at every level, has the environment, the tools, and the leadership to do the best work of their careers.

Outgrow. Outthink. Outlast.