Cyient DLM Limited (NSE: CYIENTDLM) Q1 2026 Earnings Call dated Jul. 22, 2025
Corporate Participants:
Unidentified Speaker
Krishna Bodanapu — Non-Executive Chairman
Rajendra Velagapudi — Managing Director & Chief Executive Officer
Shrinivas Kulkarni — Chief Financial Officer
Analysts:
Unidentified Participant
Balasubramanian A — Analyst
Vipraw Srivastava — Analyst
Praveen Sahay — Analyst
Madhav Marda — Analyst
Deepak Lalwani — Analyst
Naushad Chaudhary — Analyst
Amit Shah — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to the Cyient DLM Limited Q1 FY26 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 this conference, please signal an operator by pressing STAR and then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Krishna Bodanapu non executive chairman Cyient DLM Ltd. Thank you. Hand over to you sir.
Krishna Bodanapu — Non-Executive Chairman
Thank you very much and good evening ladies and gentlemen. I am Krishna Bodanapu non Executive Chairman of Cyient DLM. Welcome to Cyient DLM Limited Earnings Call. Present with me on this call are our Managing Director and CEO Mr. Rajendra Veligapudi and our CFO Mr. Srivas Kulkarji. Today we will be covering the quarter one performance of FY26. Before we begin, I would like to mention that some of the statements made in today’s call may be forward looking in nature and may involve risks and uncertainties. A detailed statement in this regard is available in our investor website Investor Update which has been posted to our website.
Firstly, I am pleased to share that earlier this quarter the Board of Directors appointed Mr. Rajendra Velikapudi in the role of CEO in addition to his role of the Managing Director of the company and as such will now be responsible for the overall operations of the company. Many of you already know Rajendra, having met with him when he was the Managing Director running some of the operations of the company and has been instrumental in shaping scientists journey over the years. Under his leadership up to FY 2023, under his leadership up to 2023, we have achieved significant milestones, expanded our capabilities and built a strong foundation for the future.
Much of which is playing out now. His appointment as CEO comes at a pivotal time as we accelerate our growth trajectory, strengthen global partnership and and deepen our presence in high reliability sectors such as aerospace, defense, medical and industrial. We are pleased to report that Q1 has laid a solid foundation for the year ahead despite navigating a very dynamic macroeconomic landscape. Our performance this quarter reflects the resilience of our business model, the agility of our teams and the continued trust of our customers and stakeholders. We are excited to see a significant improvement in our order book and I’m pleased to say that we will announce the highest ever order intake in a quarter in the past two years.
The new orders are from both existing customers which demonstrates the clients, the trust our clients have on our capabilities and quality systems and new customers, which is a reaffirmation of the strength of our sales team and our ability to deliver a solid value proposition in the market. Of course, we’ve faced certain short term challenges, most notably the delay in securing a repeat order from a major customer which has temporarily affected our growth. Having said that, and very encouragingly, our current order book shows strong momentum and we’re confident that this is just a short term pause with this customer.
It’s worth highlighting that the backlog now contains higher margin orders, signaling a favorable shift in our business compared to the previous periods, which will continue to be reflected in much better margins going forward. We have also significantly ramped up our sales efforts by deepening engagements with our existing clients and proactively pursuing new business opportunities. Simultaneously, we expanded our market reach, strengthening our footprint both in domestic and international segments, supported by a much more agile, qualified and empowered sales team. These efforts are already yielding positive results, reflecting in the significant increase in order intake. With momentum building, we are confident in suggesting in sustaining this trajectory and achieving and continuing to achieve a book to bill ratio significantly above one going forward.
I also wanted to highlight some of our Q1 deliveries were impacted due to the conflict in the Middle east between Israel and Iran. This has created a disruption in the supply chain. The Iranian and Gulf airspace restrictions have forced a number of airlines like Emirates, which carry a lot of the material that we supply to our customers, to reroute, increasing flight times and costs. Similarly, with sea lanes, disruptive demand for air freight has surged and it has further constrained space on these aircraft or in these routes, which has driven up pricing for us. Of course, this conflict is a stark reminder of how geopolitics can upend the even some of the best possible supply chains.
We are managing these challenges proactively and the support we’re getting from our clients and suppliers is overwhelming. Of course we pray for the safety of all involved and hope to see normalcy return very soon. Looking ahead, I am optimistic and confident about the opportunity as the year progresses. With the US tariff situation stabilizing, China plus one playing to our advantage, the increase in semiconductors and the use of electronics in various systems, et cetera. We expect demand to accelerate, especially in aerospace and defense, medical and industrial sectors, all of which are strong, strong areas for us.
We remain committed to delivering sustainable growth, investing in innovation and delivering value to all our stakeholders. Thank you very much for your patience. Thank you very much for your support and I will now hand over the call To Rajendra and Srini to provide more updates on business and finance. Over to you Rajendra.
Rajendra Velagapudi — Managing Director & Chief Executive Officer
Thank you Krishna. Thank you very much. Good evening to all of you. This is Rajendra Velagapudi, MD and CEO of Cyient DLM . I’ll just walk you through on some of the key trends and some of the growth strategies what we have right now in place. If you look at the key trends, I mean I won’t go in each point by point but I’ll just give the key messages from these things. So we are seeing a shift to regional manufacturing due to direct uncertainty. So we are still working on some of those areas. So we are seeing a nearshore in one of the area to mitigate.
So Altech being with us in us so that’s what we are seeing some of the advantages of local to local manufacturing. And if you look at the global EMS industry projected to grow at 6.9% cash so taking it to 1 trillion in the next seven years. That’s what the market size right now we are doing the end and the emerging sectors I think we are seeing a lot of opportunities on the renewable area plus EV adoption, robotics, automation. So we are seeing a lot of opportunities in this areas at this point of time. And on the EMS market side I think we are seeing a growth in India EMS market driven by the PLI teams and also on the industry four points.
So if you are looking at some of the impact on the ESR which I think probably Krishna just highlighted prior to this one. So we are seeing some of the shift which is happening from China plus one particularly in the last three to four months. We are seeing those happening with our existing customers from the US OEMs. So they are actively de risking some of the China dependence. So that is an opportunity which we see we being Cyient DLM’s India and US hybrid model. It helps to avoid any of this tariff feedback. That is one of the major advantages what we are seeing and also India’s cost advantage and fuel footprint in US that is one of the area where we are seeing it attracts the US OEMs.
And if you look at some of the RFQs which we are seeing at this point of time, we are seeing a spike in RFUs coming from our existing customers and also from the new some prospects in us. So where we are seeing some of the inquiries which are coming where currently they are making it in China. So they are doing for a dual source. So what we think definitely is going to give us a positive impact in the next few quarters we will be Seeing we will be working on this one very closely and as I said our growth strategy.
One of the things is I think probably we are aware of we have the build to print and build to spec. So I think mainly we are also focusing on build to spec offering. At the same time we also have a product roadmap identified some of the products where we want to focus. So some of the key areas, some of the key products have been already identified and working on some of the product development which will definitely help us going forward in terms of revenues and margins there. And we are also looking at the. New industries like US Defense, particularly for the parts which I mentioned earlier. So that’s where the Altech Electronics will really help us. Our manufacturing center in Connecticut which will really help us. And we’re also focusing on the EV and ADAS segments at this point of time. And if you look at the strengthening port business, what we are doing is we want to strengthen the port business via large deals and the sector diversification. So those are the three things which. We are working out at this point and inorganic expression. I mean on the expansion we are looking into some of the inorganic expansion strategies mainly focusing on the technology and also at the geographic footprint which probably help us to reach our customers. There are so and ensuring that it.
Rajendra Velagapudi — Managing Director & Chief Executive Officer
Will expand our capabilities. So those are the areas where we are looking the innovative expansion particularly on an existing business to bring more technology and also add more footprints closer to our customers. And also on our product roadmap. And. Coming to some of the business highlights on the Scott which has just passed by so we had one new logo in Q1 which is ToyShayCraft. So we are basically a BTS project which we are working out right now. And we also have two major BTS orders in the finalization stage which probably will be closing in this quarter. And if you look at it, I think as Krishna mentioned earlier the order intake is the highest in the last eight quarters. So we have close to $60 million order intake in Q1 which is the bookable ratio is close to 2 here.
And we are also focusing on the factory automation and digitization which is going on which is working out. So probably by end of this year we’ll be completely closing this couple initiatives from our side and strengthening sales outside of India. I think Krishna also said in the earlier that we are strengthening our sales team and ensuring that we will be focusing on the growth and that’s at this point going on and we will be continuing strengthening the sales team there. Bts I just already mentioned earlier. So we’ll be continuing strengthening the BTS capabilities through our technology and people investments and also on the product strategy there.
One last point here is on the two new accounts which have been added. During the last year. We are seeing a visibility to become multimillion doll other accounts in the next one year time frame and also some of the things which are today in the pipeline on the bds. We’ll be expecting to see a multi million dollar revenues coming from those accounts. To the near future. So I just handed out.
Shrinivas Kulkarni — Chief Financial Officer
Thank you Rajendra Ladies and gentlemen. Thank you for joining the call and thank you for your interest in Cyient DLM. I’ll walk you through the Q1 financials. This presentation has been shared with you all a few an hour ago so hopefully you’ll gone through it but I’ll give you some additional color on how the numbers are appearing and then after which we’ll open up the floor for questions and answers. So in terms of revenue we delivered 2,784 million rupees which is a growth of 8% year on year. As indicated in the earlier commentary, the growth for this quarter hasn’t been muted for a couple of reasons.
One, if you see last year I think we had a large customer order that has come to an end completely and the other thing is the conflict in the Middle east has also led to certain right shift of revenue. So this is not revenue loss. We will make up for it in the coming quarters. But for this quarter because of these two events our revenue growth has been a little bit weighted. Having said that, the margin profile of the revenue that we have delivered is significantly better than what it was. So we are showing 125 basis points improvement in the EBITDA margin which therefore means even though the revenue growth is 8%, our EBITDA growth is actually 25.3% year on year at 251 million.
PAT is at 75 million rupees with a margin of 2.7%. Now the PAT margin is also impacted by the impact of amortization that has come into the P and L. This is a non cash item but when you do an M and A you do the purchase price allocation. There are certain intangibles which get charged off to the P and L over a period of time that is sort of impacting the margins. But from an order backlog perspective we are at 2003, 132 crores which is a gross quarter on quarter of 225.7 crores or 2257 million.
Now the order backlog increase resulted from a record order intake. As mentioned earlier, we had an order intake of 516 crores during the quarter. This is the highest quarterly order intake in the last 10 quarters. And the good news is nearly 50% of this new order intake is actually exhibitable in the current year itself. So we will see the benefit of this new order being exhibitable through the rest of the year. Now the healthy EBITDA growth is also a function of better revenue mix. Now this is a sustainable change. So what time we can say is. Even the new orders that have come in have come in with very healthy margin numbers. So this is a sustainable change and we will see EBITDA from this point growing. So the 9% number is also impact is also a result of a lower revenue base this quarter. So as the revenue base picks up, you’ll see significant leverage flowing into the pll. And we were extremely confident of a double digit of this point in time. The consolidated free cash flow for the quarter is about 80 crore or 802 million rupees. This is the third quarter in a row where we have generated positive cash.
And the outlook for the next quarter is also quite good. So in terms of the net operating cash flow metrics and the net working capital, we have done a good job and we don’t have any adverse pressure on the P and L because of additional. Now as I said, the pat yoy growth is a result of two things. One is the amortization of intangible non cash items. Other is also reduced other income. I think last year we still had a lot of the IPO funds which were not used, whereas that number has now reduced. And I’ll present later in the slide how much is the money left from the IPO proceeds and that’s resulting in lower ROI income.
And these are some of the drivers for the profit change. Moving ahead. If you just see the trend of the revenue EBITDA percentage impact, I think it’s important to present this because there’s a lot of seasonality in our business. As you are aware, usually our first half is quite weak and then the pace picks up in the second half as you can see from the four quarter numbers that you’ve seen in the earlier period. So a good number to compare is ioi. So in all of these matrices I encourage you to look at the Q1 25 number and compare that with the current quarter number. In terms of the EBITDA growth is healthy due to the mix and margin increase, marginal increase in Volumes particularly further benefit by the increase that we will see in the morning quarters on the indirect cost playing out over a larger revenue.
Looking at some of the other key KPIs, the order book has shown an increase after several quarters. We are at 2,138 million rupees. Our DIO is high at 185 days. But this is also the denominator effect of a lower revenue. In absolute terms our inventory hasn’t grown much and DP oil healthy is grown by about 50 days. DSO is in control, customer advances are in control. So even though the net working capital shows an increase year on year, there’s a reduction in that number. Plus in absolute terms the working capital metrics are looking good for the firm.
That’s why there is a positive generation of forecast going forward. In terms of giving you some of the other metrics in terms of how our business mix is changing, I think the first point to note that is the industry mix. Now if you remember from a year ago, this chart used to look very different. It’s a huge presence from aerospace and defense. Now this is a well balanced portfolio with the acquisition of Altech a couple of quarters ago. So where we have a healthy mix of business coming from industrial and medtech areas as well. And then from product category perspective, more or less the business mix has remained.
And the last chart there which talks about the mix in terms of export versus domestic. This is again a big shift in our business. We used to be at around 60, 65% rest of the world and remaining in India. The one large business deal that has ended with a key customer is resulting in this changing. But what we see is a higher traction coming from the India business. So we will see that some percentage going up in the coming quarter. Tabular view of the cash. The PML is given for your convenience. To sort of check.
Shrinivas Kulkarni — Chief Financial Officer
Only thing I’ll caution is when you’re comparing year on year, last year’s numbers did not have the US operations through the acquisition. So some of the numbers might look little uncomparable. Like you see, material costs have actually gone down. The financial footprint of US operations are very different from what we have in India. But at an EBITDA level they are quite comparable. So I’d encourage you to look at it in that way. Lastly, on the IPO proceeds we have used up about 60 crores towards working capital. In the current quarter we have about another 100 crores left to be used for the rest of the year out of which 60 crores towards 60 working capital and about 40 crores towards capex.
So this is in terms of the IPO proceeds usage as I mentioned, I think we have been completely compliant in terms of the issue proceeds as stated in the RHP and we will continue to show this through as we continue to use the rest of the fund. Now there is no pressure to sort of raise funds there because they are in a healthy cash position as of this quarter. So that sort of concludes the finance presentation. We will now open it up for questions.
Questions and Answers:
operator
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 Touchstone telephone. If you wish to withdraw yourself from the question queue you may press Star and two Participants are requested to please use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Our first question comes from the line of Viprav Srivastava from Philip Capital. Please go ahead. Your line has been unmuted. You may proceed with your question. As we’re not receiving a response from the current participant we will move to the next.
Our next question comes from the line of Balasubramanian from Arihant Capital. Please go ahead.
Balasubramanian A
Good evening sir. Thank you so much for the opportunity. So my first question regarding B2S. The company added one global logo and is finalizing two major B2S orders. What is the expected revenue contribution from B2S in FY26 and how does this align with long term profitability goals?
Rajendra Velagapudi
Thank you very much for the question on the PTS. As I said so I think that. In the FY26 immediately we won’t be. Seeing much revenue coming over on this one so it will be probably a 5% of the 1. Otherwise we’ll be seeing as I said and some of the things which are right now in the pipeline where working. On this. I want take maybe 100 plus millionth of the revenue which we’ll be seeing in mobile.
Balasubramanian A
US operations have seen a significant growth especially in industrial 425% year on year and MedTech 142% growth. Like I just want to understand what is our long term strategy for balancing India and US production especially given in tariff uncertainty.
Rajendra Velagapudi
Yeah so I think as I said earlier, I think so we are all working out right now with our customers and also new prospects where we will be bringing a value in terms of working at a low cost at offshore and probably doing the final assemblies and the customer having at our US operations so that way we can Bring in value to our customers in reducing the final product price. So those are the things which we are with right now. A lot of our customers are in discussion. Some RFQs we are working out with them.
So we’ll be seeing those traction. Some work probably will be moving from there to here. Some will be moving from here to there. So we’ll be working with our customers to ensure that we’ll bring value by having both offshore and on site.
Balasubramanian A
Okay so under defense segment last year we have seen like a sharpest degrowth because of the large order completions. Like how do you look at in this segment whether we can expect rebound in shorter period of time otherwise like we are pivoting away from the different side. So how do you mitigate in upcoming years?
Rajendra Velagapudi
I think the different factor will be keep focusing as you have seen. But otherwise for last for the last year that is mainly because of one customer we said I think there is from a cyclic business. So we’ll be. We’ll be working out with the customer for the other opportunities and some other big business days. And at the same time we’re also working with the other defense prospects at this point of time both for us and also there’s a lot of focus on the India.
Balasubramanian A
Okay so under the inorganic expansion side like, like, like which are that specific focus on the target side and is there any timeline for additional MNA and how these IPO funds will be utilized in coming year?
Shrinivas Kulkarni
Yeah. So in terms of IPO funds I think those have been whatever was earmarked towards amende have already been used. So if we do a new in terms of the targets I think we have identified the areas. Right. Like Rajendra explained I think there are customer proximity, I mean the regional capis capability and technology focus other areas we are in early stage conversations with a few companies. There is a advanced stage at this point in time but for now I think it’s more of a team and get a sufficient leverage sort of do any sort of debt or equity fundraise required to make the acquisition.
So in terms of how we try to do acquisition as well as from the market perspective whatever is available. I think we’ll wait and watch to see what is the right target for us that fits our strategy. But the current IPO proceeds have only utilized whatever was at the front side.
Balasubramanian A
Okay sir. Sir. On that margin side like what’s the margin profile between acquired entity of high tech electronics compared to our Cyient DLM business and this margin like how do we understand margin profiles between India and. US operations.
Shrinivas Kulkarni
yeah, see when the acquisition happened we had mentioned this, the margin profile of the acquired company similar to the margin profile that we have now as we incubate the business, there is a lot of synergy benefits flowing into the India books as well. So it will be hard to sort of give that split going forward. And we want to operate as one independent entity in terms of the spirit of really integrating the acquired company. But when the acquisition happened, the margin profile.
Balasubramanian A
Sir, is there any margin difference?
operator
We request you to please rejoin the queue if you have follow up questions. Thank you. Our next question is from the line of Vipraw Srivastava from PhillipCapital. Please go ahead.
Vipraw Srivastava
Yeah, thank you. Sorry for being inaudible last time. So quickly on the order book side as we have seen obviously a very good ramp up in quarter one. Any plans you have, where will you end up by the end of this fy? I mean any rough idea?
Rajendra Velagapudi
I think as said earlier, I think probably our. I think we are very confident that we will be just more than one. One. I mean the book to build ratio will be more than one. Okay, so we will be beyond that month. Probably we’ll do one thing but otherwise by another year we’ll definitely. The book distribution will be more than that.
Vipraw Srivastava
Right sir. And so obviously on the Israel side as you have suggested that there is some supply chain issues in the short term but obviously with this whole war thing shaping up, defense spending and aerospace spending is going to increase in these regions. So you know, are you optimistic that you might see an increased order flow from an ID client in coming years?
Rajendra Velagapudi
Yeah, absolutely. I think we actually seeing more of those things, RFQs coming now from that region. Okay, so we’ll be seeing it. Some of those things will be coming out in this year too.
Vipraw Srivastava
Right. And the last question, obviously the BL order has been consumed entirely. Any further order wins which you are targeting for the domestic defense market or the company’s current focus is going to stay on exports only. Any thoughts on this?
Rajendra Velagapudi
I mean the India defense is one of our strategy so which we have continued focusing. We also have the sales team strengthened there in that area and we’ll be seeing those things in the next few quarters.
Vipraw Srivastava
Sure. Thank you. Thanks a lot.
operator
Thank you. Our next question is from the line of Praveen Sahay from PL Capital. Please go ahead.
Praveen Sahay
Yeah, thank you for taking my question. The first is related to the order book as there is a good improvement in the order book and also you had highlighted about the 515 crore of order inflow in the quarter which can executable over this year only is that orders is going to change your the segment contributions or that is a quite in line to the segment contribution at current level.
Rajendra Velagapudi
So it is. So it is going to be the same level where we are today. We don’t think there is any change in any of the. Okay so whatever you’re seeing the order intake which we got in the Q1 I think it is more or less in that industries where we are focusing the industrial.
Praveen Sahay
Okay so order inflow is a similar. You know the segment where we are operating and that will not change materially for a full year segment contributions. Right. Sir. Second question is related to the. Am I audible? Yeah, sorry. So second question is related to the book to bill ratio. So as you had highlighted your book to bill ratio has been highest in the last eight quarters. So can you further elaborate more on that? What exactly you know working out for you right now is that the kind of order book you are booking in which has you know improved that and or. Or the automation or digitization has something to impact on that. What exactly has happened?
Rajendra Velagapudi
So basically it is sales focus from all from. From our team. So that’s what we have seen some of those. It is not anything which has happened just like that. So it’s a lot of efforts which are gone in by the sales team. To improve this ordering date. So probably this is the highest one what we got in the last eight quarters that was 1.9. But as I said we are content that for the entire year we need more than 100% so but we’ll be working towards that number. Probably you all will be seeing that where you’ll be standing by shapi26.
Praveen Sahay
Thank you sir. Thank you. Those are my questions. Thanks.
operator
Thank you. Our next question comes from the line of Madhav Marda from FIL. Please go ahead.
Madhav Marda
Yeah hi sir, good evening. Just interacting with the company initially maybe very basic questions. Could you give us some sense in terms of revenue growth outlook for FY26 and 27 maybe and which could be the key segments which could contribute. If you could provide some color there that would be very helpful.
Shrinivas Kulkarni
Yes Madhav. We are refraining from giving a full year guidance. I think what we have said that in the past is over a long. Term period of five years I think. We can confidently say that we will grow 30% at 30% CAGR but there will be odd years where we’ll be down another year where it will be significant revenue will be higher than that. I think this is a year where we are pivoting as a business. There’s a very large order that we exhibited over the last two years and that comes to an end. But the pivot is also an interesting pivot for us because it’s actually the new orders that are coming in are at a significantly higher margin than what that particular order was delivered at.
So while we may not see a big revenue growth this year, we will definitely see better margins and better higher profit growth. But then as we continue this trajectory of the book to bill ratio being higher Denmark, it’s almost true this quarter it will be higher again in Q2 as well. What you will see is that when the growth comes back there will be definite much higher quality of revenue that will support that. PM so yeah, we don’t give a specific guidance for a year. The business is very dynamic. One order can completely change that guidance.
A growing industry, it’s not a mature industry. So that’s where we stand today.
Madhav Marda
Okay. Okay. And the bitter margins, you said that, you know, said 9% in Q1 but you said that new business can come at much better gross margin. Plus there is a lot of operating leverage scope. So you’re saying basically on maybe 2, 3 or basis margins you said can be double digits. So are we looking at teens or low double digit? I mean what’s the sense, like what’s the potential for the business? I don’t need a FY26 outlook but if you were to think three, four years out, like where do you think the margins could settle eventually?
Shrinivas Kulkarni
Yeah, I mean clearly there is a line of sight to get to teams, at least early teas if not. But it all depends on the mix of business that we grow for now for the current year we will definitely be a double digit margin company. I think even with such a low revenue in Q1 compared to what we have seen in let’s say H2 of last year, we are already at 9%. So imagine the next bit of next hundred crores of revenue coming in at the same gross margin without any growth in the indirect cost.
Leverage will play out very strongly in our. We see a line of sight. Again this is not a guidance but we definitely see a line of sight to a 12, 13% sustainable.
Madhav Marda
Okay. And how should we like better understand the scope for operating leverage in the business? Like maybe if you could help us understand what is the capacity utilization or you know, how much revenues you can grow without adding too much to a fixed cost. Just to understand the, you know, extent of under utilization of fixed costs. Which can benefit us in the margin side. Whatever you can share.
Shrinivas Kulkarni
I think, I think our current capacity. Utilization is quite low. On a full year basis we will be close to 55, 60% of capacity utilization. So we have potential to even. And this is running at two ships, right? So we have so actually run three shifts. We can potentially double the current revenue without having to add any new factory or new SMC line. So we have a huge Runway in terms of growth without having to spend any further significant capex. There will be some maintenance, capex, etc. Those will not be substantial. But what will play out is not just the factory capacity, it’s also the indirect cost.
You see our check cost, it is built for a run rate of 400, $500 million. I don’t think there’ll be any substantial addition or at least it won’t grow linearly. It will be a non linear growth in terms of the indirect cost as this will deliver. So that will play out even stronger as the battery capacity levels. So both those two levers will ensure that the leverage will play out very strongly now as we go.
Madhav Marda
And just last question. You know our negative basis, obviously our exposure to the domestic business has been smaller. If you were to think from a medium term perspective, do we think domestic can grow faster because some of your peers have been doing well. So do we plan to realign and sort of target the domestic market more versus the past or will export domestic be similar growth?
Shrinivas Kulkarni
No, absolutely. A very good question. I think domestic market holds much higher potential than the export market. Our export market is more a legacy where we have strengths that we played to in the past which has led to a higher growth. But domestic market has higher growth. And what we’ve done over the last 18 months is to build a solid foundation there and which we see results of already even in our current order intake. There’s a lot of domestic order intake. That has come in. We see that growing in the coming quarters.
Madhav Marda
Got it. All right, thank you.
operator
Thank you. Ladies and gentlemen. To ask a question, you may press star and 1. Our next question is from the line of Deepak from Unifi Capital. Please go ahead.
Deepak Lalwani
Hello sir. Thank you for the opportunity. So first question on your order book. Can you give a split between India and Altech? And if you can also spell out the execution period of our order book.
Shrinivas Kulkarni
So we will not be able to provide that split going forward. As I said, I think the acquisition is completely consumed and we are one company now. A lot of the customers are looking for manufacturing capacity in India. Similarly A lot of our existing customers are looking for manufacturing outside of India. So that split would be a little misleading. And therefore we will continue to provide numbers as one operations going forward. In terms of executability of order book, it’s between 18 and 24 months depending on the order. But yeah, that’s the range of the current order.
Deepak Lalwani
Sure. Okay, got it. So if one works with 18 months period, so 100 crores per month should be the run rate in terms of revenues. Would that be a good assumption to take for the FY26 revenue run rate, 100 crores per month?
Shrinivas Kulkarni
No, Deepak, I think the schedules are very different. I mean you can make an assumption based on a certain run rate. But it will be hard to sort of comment on that because. Frankly the. Customer schedules are what when they need the parts. And that’s what is loaded in our ERP today from which I spent 18 to 24 months. But how it plays out has a lot to do with those customers.
Deepak Lalwani
So secondly, this order info Runway was quite encouraging. So if you can spell out which clients have contributed to this basically existing clients and with sectors, that is one. And should this. I understand that your business is lumpy. So what kind of, you know, quarterly run rate or annual run rate in terms of order inflow we should. That one should work with?
Rajendra Velagapudi
I think the order intake, as I said it is between all the three. Industries which we had. Majorly from the aid existing customers. Okay. And on the medical and industrial. So that is coming from the new customers where we got the new orders. That is one of the positive things. What you have seen this quarter, where. We see those accounts will be going further going forward. So it is an equal distribution between all the three segments currently.
Deepak Lalwani
Sure. And the order inflow, run rate, any guidance that you can give for the full year.
Rajendra Velagapudi
More than one. The bill to book ratio is more than one. Definitely. So that’s what I defined. Sir.
Deepak Lalwani
Lastly, on your margin, if I, if I have to break up your margins, India standalone is at 12% EBITDA while the subsidiary is still at breakeven. When we acquired this entity, we were assuming that the subsidiary makes a higher margin, definitely more than breakeven. So how should we look at standalone and subsidiary margins? If you can spell out for the two entities and then the consol margins as well.
Shrinivas Kulkarni
So when we acquired the company, Altech had a similar margin profile as well. Now the subsidiary includes the Cyient DLM Inc. As well. Right. So therefore I think it’s not a comparable number from that perspective. See, I Think it’s best to look at this completely. The financial footprints of the two operations are also very different. I think if you look at India operations there is certain mix of materials, labor and other costs and it’s a little different. And then with the synergy benefits now playing out between each other’s entities, it’s not a right comparison to look at India and us separately.
One, I think there is a. What do you call it? I think for now I think let’s look at the composite picture. Right. And then from a consolidated perspective we are confident of exceeding the 10%. So as we grow through the rest of the year we will see better margin report.
Deepak Lalwani
Understood. And sir, on the BL repeat order is if you can give an update as to what’s happening there and why there is a delay in getting orders and when should we be positively getting the repeat order from bl if you can spell out. Thanks.
Rajendra Velagapudi
So we don’t have any clear indication of the repeat is when it is going to happen. So basically has to get it from there and the customer basically from the Indian this one defense side maybe. So we still don’t have that visibility. So we are looking out.
Deepak Lalwani
Sure. Understood sir. Thank you. All the best.
operator
Thank you. Participants, due to paucity of time we request you to please restrict yourselves to just one question per participant. Our next question is from the line of Naushad Chaudhary from Aditya Birla Mutual Fund. Please go ahead.
Naushad Chaudhary
Yeah Hi. Hope I’m audible. Quick one. First on the inorganic acquisition side, what are the gaps which we are thinking to fill. If you can touch upon this and any size in mind beyond which you will not go for this is first and second on the margin side apart from operating leverage, what are the levers you have for the expansion?
Shrinivas Kulkarni
Yeah. See on the inorganic side rather than gap that we have, I think it’s more to enhance the capabilities of what we have. We currently are into PCBA box build cable wire harness. We have design capabilities and we can offer builders tech. Right. So what we’ll be looking for is something that enhances this and we have given out broad themes where we need to. Where we look for making the. So it’s not to fill a gap somewhere that we have. Second is in terms of size. Look, I don’t think we are quite open there. It all really depends on how it fits the strategy.
Right. So we are comfortable to make a large acquisition as well if need be. So there is no restriction in our mind. Of course we have to keep in. Mind our size as well. So I think that’s the only point I’ll make there. Second on the margin lever. I think we already spoke about it. Indirect cost is definitely a margin leverage. The capacity utilization is another margin level. Mix of business between build to spec. And build to is the third margin level. As the build to spec business scales up, our margin improves even further. So you have better control over the bill of material the design services are. And NRE work will also come in at a higher margin. So these are all the three things that we will play out in our favor when it comes to margins.
Naushad Chaudhary
Sure. All the best. Thank you.
operator
Thank you. We will now take our last question from the line of Amit Shah from Antique Stock Broking. Please go ahead.
Amit Shah
Yeah. Hi sir. Thanks for the opportunity. So my first question is on the order backlog. Is it possible to share the proportion of orders order backlog say from how much is from the aerospace? What is the kind of mix basically that we have on the order backlog side? So how much from aerospace, defense, industrial, medtech? If you can share that?
Rajendra Velagapudi
I think as I said earlier, I think it is right now for the Q1 one for the order integrated backlog.
Amit Shah
I am asking for the order backlog 2,104 order backlog that we have. What proportion of our order backlog is coming from aerospace, what is the proportion from defense, what is the proportion from industrial and how much is getting contributed from effect?
Rajendra Velagapudi
Yeah, so I think that is almost the same grid right now in all the industries in the A D. Whatever you have seen in the earlier A and D close to around 40, 40% and 9% was the defense side and balance equally between the industrial and medical. Even our executable order backlog also is almost in the similar range.
Amit Shah
So secondly, you highlighted that you know, we are pivoting more towards industrial and medtech post the acquisition of all tech. I just wanted to know if I look at your historical order influence on a quarterly basis, that was quite volatile and lumpy in nature because of our dependence on the different side of the business. With this pivot, can we expect more of a consistent kind of an order inflow? Quarterly order inflow. Is that the kind of conclusion that we can arrive post your pivot.
Shrinivas Kulkarni
Would.
Amit Shah
Be more consistent as compared to historical numbers that we have been disclosing on the order inflow side?
Krishna Bodanapu
Absolutely.
Rajendra Velagapudi
Amit. I think as I said we have 1.9. I think as Sini said, next quarter it will be more than one which we are already seeing. And by the end of the year, as we said it will be more than one, the book to bill ratio. So you’ll be seeing that consistency. Probably you won’t be seeing any volatility in terms of the order intake based on the current visibility and the sales pipeline and at what stages some of these opportunities are there. So we are very confident on that.
Amit Shah
So that’s helpful. Thirdly, on the gross margin side, so this particular quarter gross margins have improved to almost like 40% kind of gross margins that you have reported and very sharp jump on a YOY basis as well as on a sequential basis supported by your revenue mix on a sustainable basis. Given that your order backlog is now tilted more towards industrial metrics kind of business, is this the kind of gross margin that one should work with? Or what is the sustainable gross margin number for the full year or annualized basis? If you can share that.
Shrinivas Kulkarni
I think what you refer to as gross margin is actually the contribution margin where you are just taking the material cost. Yeah, it is similar. I think in a specific quarter the mix can change and that will have an impact. But broadly this is the range.
Amit Shah
So on an annualized basis, should we work with a 30% kind of a number? Is that what you are highlighting?
Shrinivas Kulkarni
No, no, I’m not giving out any numbers as guidance. If you look at the current quarter, whatever you are seeing as the mix of direct material cost to the total revenue is the same mix we can expect in the coming quarter.
Amit Shah
Sure, sir. And lastly on the standalone numbers, if I look at your standalone numbers, the revenue has declined almost by 20% on yy basis. Given that, you know, large lumpy defense order has got executed in the previous year as a standalone business, how should I look at the annualized revenue run rate? What is the kind of growth that we can anticipate in FY26 and possible to share any order backlog number for the standard?
Shrinivas Kulkarni
I don’t think it’s fair to give that split now because the businesses are integrated. The only thing I’d say is from a standalone business. Yes, you’re right, the large order has come to an end in the quarter which was there earlier. But the rest of the business is growing impressively this quarter. Also we had a little bit of an issue with the push outs due to the conflict in the Middle east, but that will sort of correct itself within a quarter. Right? Actually that’s. But as we go forward, we will start seeing growth in the other areas.
Amit Shah
Of the business and possible to share. Sir, what is the kind of miss that we have on the revenue front? Because of this Middle east issue.
Shrinivas Kulkarni
No, I mean I’ll.
Amit Shah
Sequential quarter. We’ll be able to recoup. Possible to share that number.
Shrinivas Kulkarni
It will be recouped for the rest of the year. Not necessarily all in Q2 because that’s how the schedules work.
Amit Shah
Yeah. Okay, so thanks a lot. That’s it from my side. Thank you. Thank you so much for answering the question.
operator
Thank you. Ladies and gentlemen. We take that as a last question. I would now like to hand the conference over to Mr. Krishna Bodhanapu for closing comments. Over to you, sir.
Krishna Bodanapu
Thank you very much and thanks everybody for participating. As you see, we have had a very good quarter from an order intake perspective and also from a margin perspective. The third element I’ll also highlight is we had a very good quarter from a cash flow perspective having generated almost 80 plus crores of free cash. So now this gives us the confidence that as growth comes back, and I say as growth comes back because Q1 there’s just been a few one off issues in terms of some of the new orders, some of the push outs because of the Mideast.
But we’re quite confident that with the order backlog and therefore the order book, the order intake and the order backlog and therefore the order book, we’re quite confident that we will have a solid year. Not just a solid year from a revenue and a growth perspective, but more importantly, a solid year from a margin and a cash flow perspective. So thank you very much for all your support. Thanks for your time and we’ll speak again soon. Thank you.
operator
Thank you. Thank you. On behalf of Cyient DLM Ltd. That concludes this conference. Thank you all for joining us. You may now disconnect your lines.