Note: This is a preliminary transcript and may contain inaccuracies. It will be updated with a final, fully-reviewed version soon.
Cyient DLM Limited (NSE: CYIENTDLM) Q4 2026 Earnings Call dated Apr. 21, 2026
Corporate Participants:
Krishna Bodanapu — Non-Executive Chairman
Rajendra Velagapudi — Managing Director & Chief Executive Officer
R.M. Subramanian — Chief Financial Officer
Analysts:
Vaibhav Mishra — Analyst
Sumit Sinha — Analyst
Maitri Shah — Analyst
Vipraw Srivastava — Analyst
Aditya Pal — Analyst
Harsh Sheth — Analyst
Shashank Ja — Analyst
Ritvik Agrawal — Analyst
Deepak Lalwani — Analyst
Praveen Sahay — Analyst
Kiran — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to Science DLM Limited Q4FY26 earnings conference call. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing Star then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Krishna Bodhanapur non executive chairman, Scion DLM Ltd.
Thank you. And over to you sir.
Krishna Bodanapu — Non-Executive Chairman
Thank you. Good evening ladies and gentlemen. I’m Krishna Bodhanapur non Executive Chairman of Scion DLM. I welcome all of you to our Q4 FY26 earnings call. Joining me today are our Managing Director and CFO Mr. Rajendra Veligapudi, Managing Director and CEO Mr. Rajendra Velikapudi and our CFO Mr. R.M. Subramanyam. Before we begin, I would like to remind you that certain statements made during this call may be forward looking in nature and subject to risks and uncertainties. A detailed disclaimer is available in our Investor Update section posted on our website.
I’ll start by first sharing my perspective on a few key developments in FY26 and and more importantly how we are positioned as we step into FY27. On reflection, FY26 was a four year on a growth perspective and I think that is a reality that stares us. Having said that, I’m happy to say, and we will talk about it in more detail, that we end the year strongly with a strong Q4 and a strong order book that will have a strong backlog and order book that helps us deliver well into the coming years. Let’s start with the order book momentum which remains a strong anchor for our confidence.
Over the course of FY26 we witnessed consistent and healthy order intake across our focused industry segments. Each quarter we had a book to bill ratio of greater than 1 which ends up at being 1.5 times for the full year. The ability to sustain the strong order book through the book to bill ratios reflects not just the demand conditions but also the effectiveness of our customer engagement model, our service offerings and our focus on long term programs. I’m happy to say that the order intake is the highest or the order backlog is the highest that it has ever been, which bodes well for the coming year ahead.
Equally importantly, or I’d even say More importantly is the quality of the order book. We are increasingly winning programs that are more complex, more integrated, critical to our customers. Now these engagements come with longer life cycles, greater collaboration, higher barriers to entry. All of this sustains or substantiates the durability of our growth. What this also means, the type of programs that we’re working on means that we will continue to have better predictability and better profitability, which as you know, is very important to the sustainability of our business or for that matter, any business.
Margins this year at 10/ percent were very good and we believe that that will sustain into the future. A key driver behind this momentum has been our focused effort to support and strengthen the sales organization over the past few years. Over the past year we’ve hired some very good sales leaders across geographies and industry verticals. And this enhances both our reach and the depth. This has helped us to progress meaningfully from being just a manufacturing partner to being a value adding strategic partner.
I’ll say we continue to hire sales team and good sales leaders and we continue to see some very good benefit which will translate into again the coming year being a good value add strategic partner is relevant in the segments we focused on where selling is relationship driven. It is technically intensive and as you know, it comes with long consultation cycles with a stronger leadership bench and more structured go to market approach. We believe now we’re putting into place a sales team that is well positioned to convert and execute a very, very strong pipeline into FY26 on top of a good year for order intake and a very strong order backlog that we start the year with.
Of course we’ve had challenges this year. Obviously the significant geopolitical uncertainties that have characterized this year initially with the scare with tariffs and with the uncertainty, I would say with tariffs. And what continues is the crisis in West Asia. Some of our customers have been directly impacted and this has led to temporary disruptions in schedules and execution plans in Q4. Of course there is a stress and it’s hopefully a cyclical stress in the electronic component availability with what’s happening in the memory sector.
And we end up, given the complexity of our boards, we end up using memory in a lot of our boards. Also, 60 plus percent of our revenue comes from exports and therefore the global geopolitics and the global issues have a disproportionate impact on us. Of course, despite these headwinds, we performed strongly, we did well on our delivery commitments, we protected customer confidence and we responded with agility across supply chain and Execution. Another positive we’re seeing is the structural shift in the growing traction in the build to spec engagements which are higher value engagements.
While build to Print or EMS remains an important part of our portfolio, customers are increasingly seeking partners who can engage earlier in the value chain, contributing to specifications, manufacturing decisions, suppliers, part selections and of course the entire lifecycle management which includes things like service, et cetera. These wins reflect the trust customers place in our engineering depth, process rigor and governance. On the subject of margins, of course I’m thrilled with the company’s ability to sustain healthy double digit performance.
As you know, this has been our intent and our ambition and I’m happy to say that this year we ended with 10 plus percent EBITDA margin across the whole portfolio including the operations in India and the operations in the us. This is the first time that we have ended with 10% plus EBITDA margin for the entire year and we believe that we are in a very sustainable situation. Of course this is not by chance, this is through deliberate actions. We’re focused on the right segments, we’ve invested in operational excellence and of course we’ve maintained discipline in cost and execution.
We remain clear that margin sustainability is as important as growth and our objective is not short term optimization, but building a robust business model that will deliver long term value for all our stakeholders. I can again confirm that we continue to invest where it is needed, especially on sales, especially on technology, which will all lead to some very good outcomes over the years as we look ahead. I am particularly engaged by a strong entry into FY27. The order book, the pipeline maturity, early ramps, all gives us measured confidence as we go into the new financial year.
Of course there are global uncertainties but we are quite confident that structurally we have a very strong business. Obviously India’s growing role in global electronics, increased defence spending, rising electronic content, all bodes very well for Scientlm and presents meaningful opportunities. Before I hand over for the business update, I would like to thank our employees for their dedication, our customers and partners for their trust and you, our investors for your continued support. Thank you once again and I will turn it over to Rajendra to talk about the business.
Rajendra Velagapudi — Managing Director & Chief Executive Officer
Thank you Krishna. So good evening to all of you. I’m Rajendra Velagapuri. Just I will quickly walk you through some of areas of the achievements in terms of business. So first I would like to talk about give a concise overview that covers the critical areas. One is the current EMS industry outlook and its primary the demand drivers. Notable highlights and milestones recently achieved by NDLM and our forward thinking strategic roadmap organized around the pillars of Strengthen, Expand and Transform.
So to just begin, let us look at the industry perspective. The global EMS market is poised for robust expansion with projections indicating growth from approximately $650 billion in 2025 to nearly $1.1 trillion by 2033, a solid CAGR of 6%. This trajectory is fueled by a confluence of long term structural trends I.e. Accelerating electronification and digitization across multiple sectors, increasing defense expenditures worldwide, shifting geopolitical landscapes that prompt supply chain realignment and localization, the rapid emergence of AI and supporting infrastructure and a marked rise in domestic investments within India, particularly in defense and rail.
Geographically the demand is distributed broadly. APAC leads 40%, followed by North America at 35 and Europe at 25%. Segment wise consumer and IT remain dominant trailed by industrial, while automotive, aerospace and defense, medical and rail are collectively gaining strategic importance as growth drivers. The key takeaway here is that the EMS industry benefits from enduring multi year demand, setting the stage for sustained disciplined growth, shifting focus to the sign DLM’s recent accomplishments we have made significant strides on multiple fronts at the Integrated Electronics Manufacturing Interconnection event which was held in the beginning of last quarter, Scion dlm, recognized by the Global Electronic association and also achieved top honors in the fiercely contested Hand Soldering Championship where our participants emerged victorious among a field of international competitors.
These accolades underscore our dedication to excellence and are a testament to the ongoing investments we make in quality training and process maturity. On the automotive front, we have successfully completed the International Automotive Task Force Audit and secured the Letter of Confirmation, further enhancing our credentials. In addition, we have commenced series supply for a new automotive product line and initiated series production for a semiconductor mission supply partner. These are not preliminary trials, but full scale repeatable production endeavors, signaling our growing capabilities and reinforcing our entry into more rigorous customer environments.
We continued order intake momentum in Q4 as Krishna said, I am pleased to share that we secured an order intake of over $208 million for the year, resulting in a robust book to bill ratio of 1.5x. This performance is a clear testimony to our focused strategy and execution in our key markets. We witnessed good traction across major industries, reinforcing the diversification and resilience of our business model with the continued strengthening of our sales organization. So we are confident that this momentum will further improve as we move into FY27.
So looking ahead, our strategy is structured into three phases as I said earlier, so strengthen, expand and transform. If you look at the Strengthen, our immediate focus is on fortifying our core. This involves deepening our presence in key markets, pursuing operational excellence and strengthening our build to spec capabilities. Tactically, we are enhancing our go to market structures, building cross functional teams, pursuing large deals and new client logos, and investing in automation to support scalable, disciplined growth.
If you look at the X band section, the NestJS target selective growth avenues particularly in automotive, Indian defense and AI infrastructure manufacturing. We are also aiming for vertical integration across cable sheet metal and machining, broadening both our market reach and manufacturing depth while capitalizing on global industry tailwinds. If we look at on the Transform. Finally, we aim to move beyond conventional EMS models by developing products and platforms, investing in product organization capabilities and forging technology partnerships and MOUs.
This phase is designed to unlock new long term strategic opportunities and additional growth levers. So in summary, the EMS industry continues to present a promising landscape bolstered by megatrends like digitization, increased defense spending, supply chain localization and the rise of a infrastructure. Scientlm’s recent milestones particularly in automotive and semiconductor underscore our momentum. Our failure roadmap Strengthen, Expand Transform charts a clear and disciplined path for growth through the years and looking ahead for FY27.
The company remains focused on operational excellence, margin improvement and deepening strategic customer relationships supported by a strong pipeline and order book and we continue investments in capabilities and go to market. So thank you for your continued support and interest in signed dlm. Now I hand it over to RMS our cfo.
R.M. Subramanian — Chief Financial Officer
Thank you Rajendra Good evening ladies and gentlemen, this is RM Subramanan. Let me take you through the financial performance of Q4FY26 and the full year performance for the quarter revenue stood at 3691 million reflecting a strong growth over previous quarters in the financial year. On a year on year basis it is down by 13.8% mainly due to the large order closure in Q4FY25. We also observed some moderation in customer offtake due to East Asia crisis and project execution facing getting extended.
That said, from a demand perspective we are encouraged by the underlying pipeline and the order inflows coming to the order book. We ended the quarter with a strong order book of Rs. 24,166 Million with INR 672 Million net addition during the quarter. The order book reached its highest level in last 10 quarters. It is really encouraging as it gives us a good visibility moving into FY27. EBITDA for the quarter is INR431 million down 24.9% year on year and the PAT came in at INR224 million, a 27.6% decline year on year.
While the year on year comparison reflects the impact of lower revenues and operating leverage, it is important to highlight that the sequential strength in profitability is improving at a margin level, EBITDA improved 11.7% and FAT stood at 6.1%. Both EBITDA and PAT margin are the highest compared to all previous quarters of the year reflecting focused execution on operating efficiency and margin accretive business mix in Q4 let me now walk you through our full year financial performance for FY26.
Revenue stood at INR 12,615 million representing a 17% year on year decline. The softness is caused by the one large and order completion during FY25. This is also an year of moderated demand across certain customer programs and deliberate execution phasing. However, the business demonstrated strong operating resilience through the year despite the softness on the profitability front. Normalized EBITDA after factoring one also of wage, code impact and M and A expenses stood at INR 1,302 million, a decline of 10.2% year on year while reported EBITDA stood at INR 1,268 million down 12.6% year on year.
Importantly, margins remained stable in double digit driven by an improved business mix and tight control over operating expenses. At the bottom line. Normalized PAT after factoring earnout impacts for FY26 was INR563 million down 24% year on year largely reflecting operating deleverage and normalization adjustments. However, reported PAT increased by 7.7% year on year to 733 million with margin improving to 5.8% up 133 basis points year on year. Coming to the order book, we closed the FY26 with a record order book of INR 24,166 Million which is INR 5,105 Million higher than last year.
This is the highest order book levels for us since two and a half years. This is providing us a strong revenue visibility and the confidence as we enter into FY27. In summary, FY26 was a year of subdued revenue. However, we sustained double digit EBITDA margins and built a record high order book. These factors underline the robustness of our operating model and position us well for a gradual recovery and profitable growth in the coming years. This slide captures the quarterly trend of revenue and margins starting with revenue we saw a steady ramp up through FY25 peaking in Q3 FY25 followed by a moderation in FY26.
Despite the softer revenue environment in FY26, the quarterly trend shows a sequential improvement towards Q4 FY26 reflecting a gradual normalization in customer schedules and improved execution momentum as the year progressed. The margin follows similar trend as revenues with gradual improvement sequentially in FY26. While EBITDA moderate in early part of FY26, we saw a strong recovery in Q4 FY26. Same is the case with PAT as it shows a healthy upward trend after the start in FY26. Softer start in FY26 profitably improved sequentially culminating in INR 224 million in Q4 FY26.
To summarize, while revenue trends were subdued, both EBITDA and PAT margins show a clear upward trajectory particularly in the second half of the year. This reinforces our confidence in the structural strength of the business and our ability to convert growth into profitable outcomes as volumes recover. The next slide highlights the quarterly trend of our non P and L metrics starting with the order book. I mentioned earlier that we see a clearer and consistent upward trajectory. The order backlog has increased from about INR 21.3 billion in Q1FY25 to INR 24.2 billion by Q4FY26 making it as the strongest level the company has seen for quite some time.
Inventory days remained elevated through FY26 largely driven by advanced stocking for the long lead components and program ramp ups. Importantly, we are seeing reduction in Q4 reflecting tighter material planning and improved execution alignment. DSO has improved steadily Moving from the low 90s to the mid 70s driven by stronger collection and billing discipline. DPO on an average is higher in FY26 compared to FY25. During the FY26 we saw elevated working capital typical of the ramp up and revenue moderation phase.
As we move into Q4 and forward we are seeing clearer signs of normalization with sharper control on inventory, stable receivables and a healthier cash conversion cycle. We expect to improve it further as we move into FY27. In terms of revenue share from an industry perspective, aerospace, industrial and medical continue to be our largest contributors. Defence share is low and having year on year decline of 68% due to large order coming to an end in FY25. The other segment shows stronger growth largely aided by B2S business from a product category standpoint PCBA remains the largest contributor at around 48% of the revenues reflecting its continued strength across industry segment.
It is also encouraging to see the boxbill revenue share going up. Others category recorded strong growth supported by B2S and value added offerings. Geographically, the rest of the world continues to account for over 90% of the revenues driven by strong demand across four industries we operate. It is expected to remain same in the near term. Overall, the Q4 mix reflects a balanced portfolio, increasing contribution from strategic programs and strong overseas demand which positions us well moving forward.
The next slide is a financial detailed overview. This slide provides a detailed P and L view for the quarter. As mentioned earlier, revenue is lower year on year due to large order completion in FY25 and moderate offtake from few clients due to West Asia crisis. However, the quality of the revenue significantly improved along with supply chain efficiencies. As a result, we post a healthy double digit margins at 11.7% although it is lower by 174 basis points year on year. The traction is sustainable and hence provides more more confidence moving into FY27 with better control in finance charges and benefits from other income.
Normalized PAT stands at INA 224 million, a significant growth sequentially but a decline 27.7% year on year due to strong Q4 FY25 next slide revenue for the year is INA 12.6 billion down 17% year on year. Growth primarily impacted by the completion of a large order in the previous year and delayed ramp ups in few programs. Material costs are lower year on year mainly due to improved revenue mix. With the revenue contribution from high margin business increasing, we see this trend sustained. The Overall margin in FY26 have improved due to business mix and better supply chain efficiencies.
Normalized EBITDA stands at 10.3 77bps higher year on year. Reported EBITDA margin also improved to 10.1% up 103 basis points. At the bottom line, normalized PAT declined to INR563 million due to operating leverage and one time cost during the year. However, reported PAT increased by 7.6% to INR 733 million with 5.8% margin up 133 basis points year on year. Overall, despite revenue headwinds, FY26 demonstrate margin resilience, disciplined cost management and improving profitability positioning as well as revenues recover.
The slide is on EBITDA and PAD walk. The slide explains the bridge from a reported to normalized margins. The first one off relates to M and A evaluation expenses amounting to INR 17.75 million. We incurred this expense to evaluate a deal that did not go through. The second one is the wage impact totaling to INR 16.4 million resulting from the new wage code by Government of India. The third item is the reversal of earnouts from the earlier amended deal. All these expenses above are exceptional in nature and not reflective on normal business.
The padlock reflects the tax impact of this adjustment as well. The next slide in terms of IPO proceeds utilization. As of March 2025, we have fully utilized the IPO proceeds in compliance to the objects defined during the IPO. We are glad to report that IPO proceeds are fully utilized and the account stands clear. In summary, FY26 performance. This brings to me towards the end of the finance presentation before we move to Q and A, let me summarize our performance in four key points. Order books remains strong with four consecutive quarters of growth in bill to book ratio of greater than 1 revenue was impacted by FY25 large order completion.
But we are well positioned for a strong FY27 backed by strong order book margin remains healthy at double digits with further improvement possible with scale. Fourth, industry and product mix are diversified and moving in the right direction supporting the long term margin expansion. With this I’ll bring you to the floors. Thank you for your kind attention and we can move to Q and A from participants.
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 touchdown telephone. If you wish to remove yourself from the question queue you may press star and two Participants are requesting while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We’ll take our first question from the line of Vaibhav Mishra from finvestors. Please go ahead.
Vaibhav Mishra
Hello sir. Good evening. Congratulations for the very strong numbers in respect of margins and good, very good cash flow and order book and all. But I think there is a small miss if we see the YoY revenue. I think in the quarter three call we were confident of meeting our revenue YoY as well. So what could be the reason? I. I think. I mean US Tariff or West Asia War or any other reason for that.
Rajendra Velagapudi
Yeah, so as well. So first of all thanks for that. It is a question which is very important for everyone. I think the challenge, I mean the headwind. What we had is one is the West Asia War impact. So because of that the materials got delayed because usually although all our materials comes through the European, I mean West Asia in terms of the fighting, the all the fights and all. So they got delayed and so we got a very late. We got the materials for the quarter to finish it. And we also had other headwinds in terms of Israelis where we are working some other, I mean some other programs, defense programs.
We could not get some of the approvals, clearances because of the agreement, again because of the station, what is going on there and added to that and we also have some other NPI approvals from our customers. So these are the three main reasons where we could not able to meet our commitment. What we said in the last investor call.
Vaibhav Mishra
All right, sir, and sir, just to. I mean no, it is not in the presentation how much exposure we have in this Asia in terms of our supply chain or delivery and going ahead, we expected very strong FY27. So how is it going to affect our targets or what are the targets that we have set in terms of revenue and margin for FY27?
Rajendra Velagapudi
FY27, I think the revenue. I think we are not giving any of the guidance right now on the revenue side. But we definitely, I mean whatever FY26 has gone by. So that is a year which was not a good year for us. I think now FY27 you will be starting seeing the growth year over year growth. You’ll be seeing it in all the quarters, four quarters, which is a very strong. I think by looking at the order backlog, what we have and also the pipeline which we have currently. So it gives a strong reason for us to look for higher growth.
Vaibhav Mishra
Okay, So I request
Operator
You to join back the queue please as we have participants waiting for the turn.
Vaibhav Mishra
Thank you so much.
Operator
Next question is from the line of Samit Sinha from Macquarie. Please go ahead.
Sumit Sinha
Yes, thank you very much. I have a couple of questions. So obviously very strong order book growth, that sounds promising, but it’s not converting into revenue. And I can understand the reasons you provided, but can you give us some sense of how do you define order book and backlog and has that definition stayed consistent over the last few quarters?
Rajendra Velagapudi
So when we say order book, so those are the purchase orders which we got from our customers. Okay. Only that we will take it where we can take material actions. That’s where we will consider as an order book. We won’t take anything which is TCV and all those. We won’t take it as a part of our order book. Order book is very clear. It is the purchase orders which are available with us. Executable in that financial year or beyond the financial year. So it is a total order book. What we have. But for the year of a 27 order book is very, very strong and solid right now.
And that’s what I think in terms of order book order intake is I think as we said is only again the POS what we get from our customers that only will take it as an order intake. It is not anything about. This is a full TCV of five years. So we’ll get around $40 million. So that we won’t take as a part of our order intake.
Sumit Sinha
Yeah. One question I think in your slide deck you had mentioned you’re still looking for acquisitions, you know, but the IPO proceeds you’ve used up about 100%. Any thoughts on what structure are you. Are you thinking about as you look to make acquisitions?
R.M. Subramanian
Rms, let me take that. Okay. We continue to look for both organic inorganic growth and as science DNA, which is. We continue to look at opportunistic one. We will look at both from a product perspective in terms of what we don’t have and geographically. And this is our in terms of the playbook of what we look for based on what comes in our market. We continue to evaluate it and depending on the fitment, we will look at it. Okay. We looked at sometime the last quarter, but it did not go through. But we continue to look for opportunistically and as long as it fits in our portfolio in terms of growth geographically or product wise, where we don’t have that expertise, we will look for that.
So it depends on opportunities.
Sumit Sinha
Got it. One final question. In terms of you identified some new product areas. You kind of spoke about semiconductors, spoke about AI. Seems like you’re getting into more sort of critical product segments. Can you spend a minute talking about what products are you contemplating building there and give us a sense of when we should start to see the results of those new folays.
Rajendra Velagapudi
I mean particularly on the equipment manufacturing for semiconductor equipment manufacturing. So we are doing a lot of the power boxes for the customers and lot of those products which goes into the PCB as wire harness and the complete integration of those machinery, the sub assemblies which goes into the. That is. That is where I think we are focusing today and we are seeing a lot of traction from the existing customer and also from the new customers in semiconductor area. Okay, so that’s what that.
And again on the AIs side, as I said, we are expanding. That’s where I said we are now focusing more on those areas. So probably we will explore More on that and probably come back in the next quarter. If you have some update on that.
Sumit Sinha
Thank you.
Operator
Thank you. We’ll take our next question from the line of Disha from Sapphire Capital. Please go ahead.
Maitri Shah
Hello, Am I audible, sir?
Vipraw Srivastava
Yes, please
Operator
Go ahead.
Maitri Shah
Yes, yes. Thank you so much for the opportunity. So sir, you mentioned that some of our revenue was impacted due to the West Asia. What Will it be possible for you to quantify the amount that was the amount that was therefore. And I believe that’s the reason our inventory has gone up. Because the shipments didn’t go through.
Rajendra Velagapudi
Yes, exactly. So that’s amazing. So we have already planned for that. That’s, that’s what the revenue which we have missed there. And that’s where I think the inventory which has gone up the TAO and the absolute value of inventory has gone up. That is one of that reason. Because of the West Asia. Yes.
Maitri Shah
So can you quantify the amount of revenue that we lost out due to this? Will it be possible?
Rajendra Velagapudi
No, I think, yeah, I think as I said There are basically three areas where we have just impact impacted our Q4 revenues. So I think we, we don’t have, I mean yes, we have the numbers probably. I think we. It is.
R.M. Subramanian
Maybe I can get in here. You know, we don’t want to get into exact quantification of this stuff but if you look at it, some of them are postponed in terms of pushing to the next quarter etc. But what we can broadly say is these are the reasons why there’s been a gap between in terms of what we expected and what happened. But overall the way we ending this quarter is based on the order book and what we have on hand gives us a confidence that we should continue to grow quarter and quarter
Maitri Shah
Any color on the order pipeline that we have and what sort of inflows will we expect for FY27?
Rajendra Velagapudi
I mean so we are looking at the order book. I mean the book to bill ratio is greater than one as we said. I think we will be focusing on that. I think we are very, very congruent by looking at the current order pipeline, what we have. So we will be working towards that. And probably you’ll be seeing those order intakes for every quarter. You’ll be seeing a positive things going forward. Okay, yeah, so that’s what I think probably I can see on the other intake side here
R.M. Subramanian
Just to maybe 1 point add to what Rajendra said is from an order intake it’s broadly the direction of what we want. From a sectoral perspective, the non A&D segment is growing and that’s the direction we want to go on. And there are some focus new areas of what Rajendra talked about. India has a sprinkling of that aspect. So overall from directionally we are happy with the way the order book is shaping up and that gives the confidence for going forward.
Maitri Shah
Okay. All right. All right. And so what was the contribution from the BTS segment this quarter?
R.M. Subramanian
We’re not getting into the specifics of section wise thing. I think B2S is a long term play. Last year we did not have. This is the first year we are having it for the first year it has done well. And this will in terms of factification to series order and volume production, it will have a couple of years down the line is where it will come up. But overall we are very happy with the way the performance has come up. It’s better than our expectations, but we should give that division a little more time in terms of what to do.
But otherwise it continues to be a profitable division
Maitri Shah
And we. So this margin of 10 to 11%, we sort of expect that to sustain, right, Guru Maharaj.
R.M. Subramanian
Yeah, basically on the margin front. Let me try and answer this bit of it. If you look at it, our revenues could have been softer, but we’ve been able to consistently maintain the margin. It’s because based on the quality of the revenue and the order book, what we have since the color of the order book continues to remain strong and we are happy about it, we can say that we are confident of sustaining it. And if you have the top up in terms of the growth, the operating leverage impact will start kicking in and we can have something on top of this, the target.
Okay, so that’s what we are confident about in terms of sustaining and performing better as the volume grows.
Maitri Shah
And so given the strong order book that we have, can we expect somewhat like 25 to 50% sort of growth for FY27? Would that be a fair assumption
R.M. Subramanian
On revenue guidance? We clear that we will not be giving any guidance on that. But having said that path, what I can say is, you know, Q4 was a good quarter in terms of the growth, Q1Q and also the order book and the visibility. What we have gives us the confidence it will be going to be a strong year which will make probably everybody happy. And I don’t want to be getting into the numbers and let’s leave it at that.
Operator
Okay. All right, thank you. Next question is from the line of Aditya Pal from MSA Capital Partners. Please go ahead.
Aditya Pal
Hello. And audible.
Operator
Can I use your handset mode, please.
Aditya Pal
Yes, sure. Is it better now?
Operator
A little better. Please go ahead.
Aditya Pal
Yeah, thank you so much for the opportunity. Great performance on the margin front. Sir, had two questions on Altech and then on the investments that we made on our sales team. So let me start with Altech. So Altech historically operates in a much shorter book and ship cycle compared to the 1824 month gestation that we usually see in our standalone base. So how do you see this impacting our projected 27 consolidated revenue? Because there are, there’s enough and more Crosswell synergies. So just if you can, if you can highlight between the growth that we are seeing in standalone vis a vis Altech.
Rajendra Velagapudi
Yeah, I mean so I’ll take, I’ll take. I think as you rightly said, Amit, we see, we usually get it order intake in the same year. Most of the things getting converted in that year, almost 50% I can say get converted. I think we are seeing a good time and we also have a good order backlog right now available and we also see a lot of pipeline from the existing customers. And also to add to you, I think we also added one of the new customer, the Synergy customer from the signed DLM standalone side.
Now they also just started working with Altech. We got the first pivot there in the last quarter and we’ll be seeing more of those tractions happening from the Synergy coming in. And, and with the order, with the order book which we have, plus the pipeline which we have, we are very confident that we’ll be seeing the growth in altech business in FY22.
Aditya Pal
Understood. So the growth rate is not. The growth rate that we’re seeing in our order book is not explicitly reliant on specific CrossFit synergies. If it happens, it’s an additional. Correct,
Rajendra Velagapudi
Correct, correct, correct. Exactly.
Aditya Pal
And on the invest the point that you highlighted in your introduction that we’ve investment, we’ve invested in our sales team. So when I look at the standalone EBITDA margins vis a vis the difference between the console and standalone, the margins, EBITDA margins have gone down. It has in Q4 specifically. This is purely because of our investments that we made in. I’ll take in employee benefit in employee expenses. Correct?
R.M. Subramanian
Yeah. Let me answer this question in terms of the. The average EBITDA margins between the India and US business. US Business is going to be lower and that’s something which is expected because US Manufacturing will have a lower EBITDA margin. So this is in terms of the Expected lines. That’s point number one. Point number two. Overall, Altech and the growth in Altech continues to have a bit of a overhang with respect to the tariff Overhang still continues to be there. You know, there’s no clarity in terms of how, which direction is going, which I think we are all aware of.
Okay. Overall the synergy benefits in the cross pollination, there’s a little bit of a slowness in it. Hopefully things should settle down and then it will lead to it. And once we have a cross pollination where Indian customers start going through Altech and the US customers start moving to India, we will see those benefits. Those benefits are just started on a trial basis happening, but not in a full fledged. But when that happens we will have a uptick in the margin. But as of now none of them is factored in.
And as you rightly said, the margins are lower. But that’s, that’s unexpected. The more we start moving to India and using Altech as the beachhead in terms of US business is where the uptick will come in. But that will take some time and it also dependent clearly on the tariff overhang getting cleared which should happen over the period of time.
Aditya Pal
Understood, Understood. Just let me squeeze in one more question. So the question one is on the current investment that we made in employee. How much in the sales team, how much sales can they generate and what is the revenue potential of the sales team? And then also if you can, if you can just help us understand the build to specification. Right. Because last couple of quarters back you had said that mass manufacturing orders, at least for the new, for the four new anti clients that we had onboarded will start coming in from FY27, Q3 or Q4 and we would see this, we would see actually scaling up in FY28.
Is this still on or do you see this happening later? Earlier than expected? If you can just comment on that.
Rajendra Velagapudi
No, I think as you rightly said, that’s what is going to happen. We’ll be seeing it some uptick in the order intake because of these new people who are on board and we’re also adding few more people where we are in the, where we are in the process right now. And with all that we’re definitely seeing more order intake in Q3 and Q4 and beyond. Yes, from these, all these new people coming in.
Aditya Pal
Understood. So and also in the build specification that you had mentioned last quarter that we onboarded four new clients in the, in the, in the defense vertical.
Rajendra Velagapudi
Absolutely. Yeah, yeah, yeah. You’ll be Seeing the. Yeah, you will also seeing the bts, the revenues and also on order intakes for the next year. Yes.
Aditya Pal
So the inflection point will be fag end of FY27 or more to. Or we’ll see see the visibility more coming in FY28.
Rajendra Velagapudi
No, it will be on the flag end of FY27 and. And also in FY28 board. Yes.
Aditya Pal
Perfect. Perfect. No, this clears a lot of things. Thank you so much and wishing you. Wishing you and the team all the very best.
Rajendra Velagapudi
Thank you. Thank you.
Operator
Thank you. Ladies and gentlemen. In order to ensure that management is able to answer queries from all participants, kindly restrict your questions to two at a time. You may join back the queue for follow up questions. We also request participants to keep their questions brief. Thank you. Next question is from the line of harsh sheth from PI Square. Hi
Harsh Sheth
Sir. Good evening. I just want to understand a bit more about the dip in margins that we saw this quarter. I think you answered it previously. I just wanted to get to know more a bit because we moved out of the aerospace. Sorry. Of the, of the defense orders which should give us higher margins but we saw dip debt. So can you explain a bit more.
R.M. Subramanian
Yeah. From a margin perspective. What I think as we reported we continue to sustain the double digit EBITDA margin which is our focus on. Okay. And in terms of the, the absolute numbers. Okay. Obviously there’s been a drop in terms of margins. Okay. Okay. Moving forward as we move along and if the product mix remains the same. Okay. These margins are sustainable in terms of what we’re doing.
Harsh Sheth
So like could you just go more into the reason for the dip there in the, in the margin. In the EBITDA margins.
R.M. Subramanian
The EBITDA margins in terms of overall, if you look at it, it’s actually improved. Okay. I’m talking
Harsh Sheth
About this, this quarter to be, to be specific, we saw a dip.
R.M. Subramanian
Yeah. That’s more reflected on the revenue drop and the operating deleverage impact because the fixed cost continues to remain the same. That’s, that’s the impact of the token.
Harsh Sheth
So. But shouldn’t we have seen better margins from. From not taking up the orders from the, from the defense phase?
R.M. Subramanian
Wasn’t that
Harsh Sheth
The reason that we moved out. Out of the space in the first place?
R.M. Subramanian
That’s what I said. At the percentage, at absolute level it has come down and at a percentage level it’s, it’s improved on maintained and that’s what I explained. Which is because of the revenue de growth and operating deleverage impact.
Harsh Sheth
Okay,
Maitri Shah
Got it.
Operator
Thank you. Next question is from the line of Shashank Ja from SB Capital. Please go ahead.
Shashank Ja
Hello.
Operator
Yes Shashank, please go ahead with your question.
Shashank Ja
Yes sir, I have one question which is regarding the order book. So when you say build to build order of 1.5 then the order book continues like 400 crores is receiving. So it means that we can do 1600 crore plus of revenue. If I can you confirm that?
Rajendra Velagapudi
No, no. I think see order book, whatever is there in that is executable order book in this financial year. And then I think as we as said earlier, the order book, whatever we have is maybe 18 months to 22 months, 24 months range. Right. So not that everything can be happening only in one financial year.
Shashank Ja
So can you give up a number like I’m asking question number.
Rajendra Velagapudi
That’s what I said. We’re not giving any guidance right now on that in terms of how much of the order intake will be converted as a revenue in FY27. So we are not giving that guidance. But probably you’ll be seeing that in the next quarters itself. Starting from next quarter itself, we’ll be seeing that growth.
Shashank Ja
Okay. And second thing is that like order book, when you say so can you give me what how big is the pipeline? Some number conservative also will be fine, sir.
Rajendra Velagapudi
I mean are you talking about a sales pipeline? What we have.
Shashank Ja
Yeah, yeah. Order book pipeline that we are negotiating right now. Are we asking for next one year?
Rajendra Velagapudi
I think we have a very good order order pipeline right now. As I said, it is a closer to a half a billion dollar order pipeline which we have today. The sales pipeline where the teams are working out to make those things as an order intake. So that’s where I think the focus is going to be in the FY27 order intake targets which we are driving it internally.
Operator
Thank you. And
Shashank Ja
Lastly on the margins, Shashank,
Operator
I request you to join back the queue please as we have participants waiting for their turn. Thank you. Next question is from the line of Vipro Srivastava from Philip Capitan. Please go ahead.
Vipraw Srivastava
Good evening. So quickly, one line item on the balance sheet which is contract assets. Can you please explain what is that?
R.M. Subramanian
Contract assets is a unbilled revenue which we have. Okay, that’s more from the B2S thing. Yeah. Okay,
Vipraw Srivastava
Fair enough, sir. And so from a working capital perspective, what kind of targets you have for this jme, do we see further improvement from here on or you expect to maintain the current level?
R.M. Subramanian
Yeah. On networking capital which we talked about is Slightly elevated. So we definitely see possibilities for improvement and we’re going to continue to work on it. Our target is to reach about 100 to 120 in terms of the number of days, but we have some distance to go. Maintaining what you call a profitable efficient operations and growing is always a challenge, but we can you do it and we continue to work on improving it. Okay. It’ll take a couple of years, but that’s a work in progress.
Vipraw Srivastava
I think the last question from my end, from a nanospace perspective that the company has been European defense company as a clientele, are we targeting new geographies or are we continue to be limited to Europe and Middle East?
R.M. Subramanian
Can you repeat the question please?
Operator
Can you use your handset mode, please?
Vipraw Srivastava
I wanted to know, sir, from an aerospace perspective, we currently have clients in Middle east and Europe, you know, Israel and mainly Rafael and Theids and all these companies. Do we have plans to switch to other clients also or we plan to increase our volunteer with these clients?
Rajendra Velagapudi
That’s what I think. Earlier RMS also was mentioning that we’ll be also focusing more on the non A and D side of the business. So which we’ll be seeing that I think if you look at some of the order pipeline what we have. So that’s where I think it gives a strong to us saying that yes, we’ll be seeing more of the non A and D along with the IND growth, whatever we have, the pipeline will be continuing. But yes, not that because of whatever is happening today in the West Asia or in other areas, but we see a traction definitely in the nond.
And we’ll continue that along with the. And
Vipraw Srivastava
Right. So thank you.
Operator
Thank you. Next question is from the line of ritvik Agrawal from 3P Investment Manager. Please go ahead. Can you use your handset mode please?
Ritvik Agrawal
Yeah. Is it better?
Operator
Yes, please go ahead.
Ritvik Agrawal
Yeah. So I wanted to ask two questions. One was on the directions on margin in the future years and on the areas of growth. Where do we see growth coming from in terms of revenue and order book and particularly we have had some days in the quarter during the war season. Are we seeing any positive commentary from the Israeli defense customers?
R.M. Subramanian
I’ll take the questions on the margins. Okay. So in terms of the margins, we are confident of sustaining the margins moving forward. This is based on the order book in terms of customers, of what we have with the current mix we can continue to maintain and with the growing volumes, there will be a couple of basis points improvements with respect to the operating divergence impact which is on the positive side. Okay. That’s what we will continue to aim for in the next year. In terms of the business growth.
Yeah.
Rajendra Velagapudi
As I said, I think as. I mean if you, if I can answer your last point. In terms of the defense era Israeli business side, I think we’ll be seeing a lot of attraction there which we are seeing it right now. There are a lot of RFQs in the pipeline which we are working out currently. And we’ll be seeing more of the order pipeline and the order intake coming from the Israeli customers. And we see the growth not only from that one area, even from existing customers both in aerospace, non aerospace and also the new verticals electric vehicles where we are focusing.
We are seeing a lot of traction in that one. So we will be seeing more of the revenues growth coming from those areas too.
Vipraw Srivastava
Thank you.
Operator
Thank you. Our next question is from the line of Deepak from Unified Capital. Please go ahead.
Deepak Lalwani
Thanks for the opportunity. So firstly if you can cover the geopolitical aspect see us is a big portion of our revenues. So with the reduced tariffs have we seen any pick like any pickup in the demand and order or the book. That is one. And also the West Asia crisis, how much I didn’t, I didn’t understand how much proportion of our revenues is coming from the Israeli client. And I’m assuming he would have not given you the delivery timeline yet because nobody knows when the war ends. But on the freight aspect, are you able to read out from other, other lines or the modes of transport that you’re getting the supplies for your raw material that you, that you elaborated.
So on these two fronts I wanted your clarity.
Rajendra Velagapudi
Okay, so yeah, sure. Definitely Deepak, on the tariff side. Yes, there is slightly, I mean the clement. Yeah there was some clarity but still the cloud has not gone away, correct? I think so. We still mean. We still don’t know, but the customers are still waiting. We are seeing some opportunities coming right now asking us for submission of the codes. But it was not that what we were having in the past. But I think probably it will just clear that cloud in the probably the next 1/4 or so once you get a full clarity from the ES tariffs.
Okay, but otherwise. Yes, but to your question, yes, we are seeing the new opportunities coming in right now. And on the second one on the West Asia, it is not that it is only from one region there where we are, where we could not able to make the revenue. Sorry. It is mainly the supply chain where we are getting it through the air cargo. I think all that cargo comes either from Dubai or Doha. So that’s where I think we had a lot of challenges in getting the materials. It is not that our final goods are only for the customers there in the UAE region.
So. Okay, it is not for that. It is basically for all the customers where we have got impacted because of not getting the materials on time.
Deepak Lalwani
And on this aspect are you able to fix this issue? Has there been any solution to it that you found which gives you a good visibility going forward and this. Yeah, you can answer this then I have another question.
Rajendra Velagapudi
Yeah, I think we are taking an actions wherever wherever we see the impact now I think that’s where I think our inventory also has gone up because of the materials where we have some partial materials and we are working out to ensure that we get the materials. And also as Krishna said, there are also some challenges in terms of the lead times gone up for the memories. Correct. So those are the things where we had some impact of the inventories and we are so now if you ask me what some of the actions we have already ordered the materials for a long for the entire FY27, particularly for the critical items where there are long lead items.
We already placed the orders so we are ensuring the so that way at least it is will ensure us that we will meet our commitments for FA27.
Deepak Lalwani
Okay, thank you. So one more question. I
Operator
Request you to join back the queue please as we have participants waiting for their term. Thank you. Next question is from the line of Praveen Sahai from PL Capital. Please go ahead.
Praveen Sahay
Yeah, thank you for opportunity. Sir, my question related to the order book is first one is either any order from the associate companies of a client you have and how is the mix of a geography in your order book because you know highlighting the RM delay or the Israel Defense orders these which has impacted your revenue. So is this orders also in the near terms expected to get a delay in execution.
Rajendra Velagapudi
So I think to your this initial first question. So we don’t have any intercompany orders. Okay. It is all from the customer orders. Whatever we have today with us, all order books are from from our our customers, not from any intercompany. And second thing is. Yes I think in terms of you said about the second question. Second question. Sorry, what are the what is the other one? Second
Praveen Sahay
RM delay delay which has impacted your revenue. And the second the Israel Defense orders. So you have an order book such kind of order books we you have already. So in the near terms we may see execution challenges of your order book because of these.
Rajendra Velagapudi
Yeah, yeah. There will be see now today what happened. Whatever something, whatever revenue we missed in the Q4 now that I just moved into the Q1, some of some of the revenue has come into the Q1 correct with where we’ll be working. So that way you’ll be seeing some other rate shift and probably once the issues get settled down, probably I think everything will come online. Yeah. On track.
Praveen Sahay
And last question on the margin, that’s gross margin. So your gross margin if I look at on the sequential basis there is a contraction and that’s definitely because of the memory or the RM electronics availability and all. So how you are seeing this gross margin movement in the coming quarters or even 27 considering such kind of a challenges to continue.
R.M. Subramanian
So let me take this question. Gross margin, it’s not seen a huge moment. A couple of basis point movement has happened. The reflection of product mix in terms of what we manufacture quarter on quarter it’s not going to be uniform right through that’s point number one and point number two. There are also near term factors of what the supply chain and the disruption and few things like that. So it’s a combination of both. Hopefully our target in the long run is to maintain the EBITDA at the double digit level.
And in terms of what we’re doing. Okay, that’s what we do. There will be a bit of volatility between all of this for the reasons I said. But hopefully we have been able to manage and sustain the margin and that’s what we will aim for to do in the long run.
Praveen Sahay
Thank you sir and all the best.
R.M. Subramanian
Yeah, thank you.
Operator
Next question is from the line of Kiran from Table 3 Capital. Please go ahead.
Kiran
Thank you so much for the opportunity. 2 part question 1. Other expenses have significantly gone this year even this quarter despite the year on year despite the significant drop in revenue. Our other expenses have gone from 29 crore to 44 crore. Q3 was the same. So and this is obviously differing our EBITDA margins quite significantly. So what accounts for these other expense increases despite severe degrowth in revenue?
R.M. Subramanian
Yeah, in terms of other expenses what you’re seeing is a mix of both US and India operations are put together. What you’re seeing that effect and moving forward, you know, once we see the revenue growth. Okay, these are the expenses in terms of will have the operating leverage effect of, you know it’s going to be broadly fixed. So that’s how. And we’ll keep a tab on in terms of what we do with that.
Kiran
Sorry sir, not clear at all. I mean your voice was Clear. But your answer is not clear.
R.M. Subramanian
What I’m saying is the other expense is a mix of both the India and US operations put together. Okay. And there are as we move forward and when the volume picks up, this item specifically will have in terms of the fixed rate in nature. So you will have the operating leverage impact. But what you’re seeing is the volume as a percentage has gone up. As we move forward, this will be under control.
Kiran
Got it, got it. Second question is in Q3. I guess Christopher did speak about 25% year on year growth next year in FY27. So if I just do rough numbers again I’m not looking for exact numbers. We’ll end up with around 1600 crore revenue next year. If we do a 25% growth roughly and our remaining auto book will be 800 and year on year we’ll add like quarter on quarter 500 so 2000. So are we really, I mean despite all of the competition increasing their order books at 40% and similar spaces. Right. Defense, aerospace, industrial, medical, quite a few competitors are there.
There seems to be some structural. Is there a structural issue why we are not able to grow Altech acquisition didn’t go according to plan. When I say because you reverse the earnouts so that tells that it will not act according to expectations. We are not growing our order books by 35, 40% like rest of the company who cater to industrial, medical, aerospace and events are not even considering consumer. Right. Is there anything structural that we are seeing a problem within the organization or is there some industry issue or is it a West Asia exposure issue?
Just not clear around the strategy of what we are saying, sir. I mean the similar numbers, ebitda, double digit margin, all that is taken. But there seem to be something missing in the entire Jigsaw which we as investors are not able to understand.
Rajendra Velagapudi
I think. So it is a very good question from your side. So I really appreciate that. See I think if you. If so you can look at it the investments what we have just made in. In terms of the our team, sales teams. So we just started and then we have 15 people on board. As I said, we are still getting some more people in this quarter. So I think those are the things which probably gives us a good order intake and also the new pipelines coming up to us. So there is no structural challenges anything in the organization because we are running the business in the last couple years.
So we have not seen any of those challenges. So it is predominantly having the right people there on the ground so that we can get the new orders and go to the new customers and acquire them. So I think, as you said about the growth percentages, I think we’ll be within the ballpark range here for the next finance there for the FY27. And we are very confident on that one.
Operator
Thank you.
Krishna Bodanapu
Just to add to what Rajendra said, I think, you know, we did have a challenge in order intake in FY25 and that’s why we had to make some changes in the organization. That has translated to the order increase in FY26. If you look at our order intake increase, I mean, you mentioned competition at 35, 40%. We are also at that percentage between FY25 and 26. So yeah, I mean, extrapolating that, yes, we did have a problem in 25 in order intake, which translated to obviously, obviously the revenue that you’re seeing in 26.
But the fact that we are at competition or even I would argue higher than competition in 26 should translate or will translate into a very strong FY27.
Operator
Thank you, ladies and gentlemen. We’ll take that as the last question for today. I now hand the conference over to Mr. Krishna Bodhanapur for closing comments. Over to you, sir.
Krishna Bodanapu
Thank you very much and thanks everybody for joining today for this investor call. Obviously we’ve talked about a lot, but I’ll just say thank you for the very insightful questions and thank you for also giving us some food for thought on where we should be looking at and what we should consider. Like I said, it was a good start to the year given that we’re coming off a very, very strong order book. So I’m confident that we will have a strong FY27. Thank you for your support and we’ll again speak next quarter.
Thank you.
Operator
Thank you. On behalf of Science DLM Ltd. That concludes this conference. Thank you for joining us. And you may now disconnect your lines.