Thank you very much. Our first question comes from the line of Gaurav Shukla with Finvestors. Please go ahead.

You are audible, sir. You may proceed.

Thanks, sir, for giving me opportunity and congratulations on good set of numbers. Sir, I want to understand the effect of West Asia crisis. And in the last concall you said that Israel needs approval...

Sorry, we're not able to hear the speaker very well. Could you repeat the question?

Yes, sir. I'm repeating. Now audible sir?

Yes, better.

Sir, I want to understand the effect of West Asia crisis that has going on. And in the last concall, you said that Israeli's need the approvals in some business are not done. Are they happening or still not pending?

Okay. Effect of West Asia crisis. And two is, we'd last time said that from Israel, we still had some orders, et cetera, pending and we've been seeing delays. How is that changing?

Okay. Hi Gaurav, this is Rajendra here. So, on the West Asia crisis, yes, I think it is still there, going on, but as earlier I think Krishna also pointed in terms of our planned execution and ensuring that we will be keeping some of the inventory for a longer run, I think those are the things really helped us to overcome the current challenges what we have in the West Asia crisis. What we are seeing even now today is there is -- there are some delays in the logistics in terms of shipments and we are also seeing some of the costs going up due to these West Asia crisis at this point of time. But we are already well planned in terms of our execution, so we have not seen any of those challenges in Q1 and we also just put a plan together to ensure that those things won't impact much in Q2. And to another point about the earlier the Israeli things which we are seeing, we are seeing the momentum in terms of the order intake. That's what we had good order intake we had from the Israeli customers and we see the continued momentum in Q2 and beyond also going forward.

Thank you. Our next question comes from the line of Vipraw Srivastava with PhillipCapital. Please go ahead.

Hi sir, good evening. Great set of results. Just quickly on the new entry into the data center side, AI side, just want to delve deeper there. Any discussion with the hyperscalers which is happening currently or it's at a very early stage and you know in coming quarters you'll give us more information. Any thoughts on the AI data center entry for the company?

Okay, sir. That makes sense, sir. And secondly, given the West Asia crisis, which has been hampering our growth at least last year, does it have any problem now or it's fully resolved? What are your thoughts on that?

I mean, as I said just before to another question from Gaurav, I think yes, West Asia crisis is still there, it has not gone, but the planning what we have done to ensure that we will be getting some of the inventories, holding that wherever we have some challenges for some of the materials, I think that planning has really helped us for the Q1 outcome and similarly I think the Q2 also we have planned that, so we don't see much of that at this point of time.

Right. And the last question from my end, the company is also venturing into the semicon side where you mentioned that you know testing and assembly -- the last end has also -- is also in high demand because of the AI play. So, any thoughts on that? What kind of product profiles you're looking to enter on the semicon side and what kind of timelines can we expect in terms of finally that coming in the P&L?

So, I think what -- I think we have already, I think, sometime back we just mentioned that we are working with a semiconductor capital equipment from some of the customers. I think we are continuing -- so we are seeing some of the robust the growth plans in that area. So, we will be continuing working towards that and where we are building some of the products for our customers in the semiconductor capital equipment. Okay, so that's what basically I mentioned in my earlier one.

Just a follow -up, sir. Any thoughts on timeline? I mean, when can it materially impact the P&L? Next year, next to next year? Any thoughts on that?

No, I think we will be seeing some of the growth coming in in that area, so over the next 6 to 12 months we will be seeing more of the revenue growth which probably in turn will also give us some leverage in terms of the margins there.

Yes. So, thanks a lot, sir. Thank you.

Thank you. Our next question comes from the line of Deepak Krishnan with Kotak Institutional Equities. Please go ahead.

Hi sir, am I audible?

Yes.

Sure. Maybe just wanted to delve a bit on similar sort of questions. So, we have this expand target till FY29. Wanted to just pick your brains in terms of how do you see the overall growth CAGR for the company in this time frame, 2026 to 2029, and how much of the contribution would be from AI data center, robotics in say 2029 in terms of revenue? And where are we in terms of client approvals and how long after client approvals do things come into numbers? Second, maybe in the transform phase when you say margins go to 13% to 18%, you know steady state what are you looking as B2S to an overall contribution to revenue and what would

be the margin delta between say what we do today in B2S so that we can at least see how we bridge the gap to about 13% to 18% and then I'll come up with the follow-up question.

I think in the expand phase, so when I said about expand phase, I think some of the new things which you mentioned about the robotics and the AI data centers and infrastructure, I think that is the area where we will be focusing in FY28 and 2027 to 2029. Okay, so that will be taking some time for us to see the revenue coming in, but the order intake is where we will be seeing it in this year itself. Okay. So, I think as I said we already have the people on board, I think so we are driving that growth in those new areas. So that will really probably give us some leverage in terms of the margin expansion there too. And coming back to your other thing on the transform side, you just mentioned, I mean, that is one of the B2S. So, we already have our internal plans both I mean in terms of your expand stage which you earlier asked the question about what percentage of the revenue will be coming from each industries and also these new two segments. So, we already have the plan of actions in that and what will be our CAGR growth going towards for the next two years. And also, for FY30 and beyond, the plan what we have for the B2S, the percentage of revenues coming from the B2S in FY30 and beyond. So based on that, that's where we have just arrived at the margin profile ratio of what we mentioned there, yes.

Sure. Any range on AI data center robotics that you could give and by FY29 what percentage? And maybe just another question, given you're a net exporter, what factors drove to an fx loss in this particular quarter if you could sort of highlight that as well? Maybe both these two questions if you could get back to?

Okay. I think as I said we are not giving that guidance how much of that growth will be coming from these new sectors. Okay. As I said, that is internal thing which we are -- which we have a plan of actions to take. So, we will probably, once we have some new customers in that area, then definitely, we will probably let you know in the next two to three quarters.

On forex, let me try and answer that. Last quarter, the last month was rupee appreciated a bit. So, as you know, our balance sheet is pretty exposed in terms of our business is on the export side pretty large both on exports and imports. So, the net impact is what you are seeing on the balance sheet with the respect to the last one month where the impact is seen.

Sure, sir. Maybe just one follow-up. Also, order book, any sort of range that you want to end the year within terms of book-to-bill ratio?

So, book-to-bill ratio will be at the same thing where we are today at 1.5x. So, we will be at that number for the year too.

Thank you. Our next question comes from the line of Shubhi Gupta with Trinetra Asset Managers. Please go ahead.

Hi, sir. Congratulations on the numbers. So, I wanted to understand, we see that the Med Tech segment growth is quite flat. So, I wanted to understand why is that? And also, how do we see that progress for the rest of the year?

Yes. I think the Med Tech is where we have some seasonal impact in terms of one of our customers right now, which is there. And in terms of the growth for the Med Tech, yes, I mean, we do not see any of the concern. We have the pipeline which is available right now in our sales pipeline. We already have some of the opportunities in that particular sector. So, we do not see a challenge anything in terms of the Med Tech there right now.

Sir, how much of the pipeline is coming from Med Tech?

Med Tech is either way I mean around the same what we have today in terms of our revenue mix, maybe around the 17% to 20% range is where we have today our sale pipeline for the Med Tech too.

Okay, sir. Thank you.

Thank you. Our next question is from the line of Balasubramanian with Arihant Capital. Please go ahead.

Good evening sir. Thank you so much for the opportunity. So, our pipeline nearly INR4,000 crores, what is the breakup in terms of vertical like aerospace , defence, industrial and MedTech. On that platform is [Inaudible 00:38:03] Lane and Lane 2.

I mean you guys are looking at the distribution of that order book or order intake you were asking or the order book you are looking at?

Sir order pipeline, sir?

So order pipeline?

We have nearly INR4,000 crores.

Order pipeline no, INR4000 is…

No, no. It is more than that. It is almost…

We do not mention that…

Order pipeline…

It is $0.5 billion.

I do not know where are you getting the number of order book...

No, sir. That is a future pipeline it is around $0.5 billion let's say, anywhere INR4,000 crores to INR5,000 crores range?

No, I think we have more than that order pipeline, okay? So, the number, I do not know if we did you get that one, but we have a substantially higher pipeline at this point of time . Yes. Very, very high sales pipeline.

And we report order book and order intake and order pipeline is obviously much ahead of it . That is something which we do not report or disclose on that number.

No, sir. Actually, I am trying to understand if we have a new growth vectors like AI and data centres and robotic side. So, I am trying to understand that point of time. If you could explain in terms of platform side, whether like the legacy businesses like aerospace, defence and industrial and Med Tech and how that Lane 1 and Lane 2. So how that things are moving up in terms of our pipeline? Rajendra Velagapudi Yes. I think if you look at it, the various segments, what we have in aerospace defence, close to around 48% will be there in aerospace and defen ce, in terms of the pipelines, what we have. And close to 40%, roughly less than 40% roughly is on the industrial and semiconductor equipment side, capital equipment side. And the balance is predominantly coming from the medical industry and automotive is a small one there.

Okay, sir. Thank you.

Thank you. Our next question is from the line of Praveen Sahay with PL Capital.

Thank you for the opportunity and m any congratulations for a good set of numbers. My first question is related to the ROW sales because they are the 40% of the growth on the YoY side, we are seeing but there would be some element of a rupee depreciation as well. So, in the same currency terms, how was the growth there?

We in terms of reporting normally, we do the reporting in INR, okay. In terms of dollar growth rate. Okay. We can give the numbers separate ly to you in terms of we can get back to you on it.

Okay. Second question, sir, is related to the , as you had a report, your operating cash flow is still negative. So, what is the prim ary reason and when do you expect the working capital to normalize?

Yes. As I explained to you earlier, the negative free cash flow is essentially coming up from higher inventory and lesser customer advances. And we have talked about it earlier as a company, we are growing, and we need to keep making sure that the growth is well set in terms of inventory because inventory is something what we need to do as a leading indicator. We have to stock enough to make sure during this difficult time, our revenue is not impacted in any way. And we are happy to say that that is something which we have been able to

achieve as you can in the results, okay? So as long as we have this growth, these investments which we need to do it. But once we have the growth and the inventory coming under control, which we are working on, the cash flow will turn positive, and that is what we are all working towards.

Okay. Last question is regarding the B2S platform. So, when do you expect a meaningful revenue contribution from B2S product and what would be the margin compared to the EMS business?

So probably you will be seeing. I mean we already started having some revenues coming from them in the B2S. So, we will be seeing it substantially a good revenues from them in the next one year to 18 months. That is what we will be seeing the revenues. And in terms of margins, as you said, the overall when you just look at the combined one, you will be getting additional 250 bps to 300 bps additional margins when we have a consolidated EBITDA margin due to the B2S opportunities.

Okay. Thank you, sir. All the best.

Thank you. Our next question is from the line of Sameet Sinha with Macquarie.

Yes. Thank you very much. So, in context of the strength that you saw in the first quarter, can you talk about any sense of guidance for the year? I know last time you said , did not give hard guidance but you said sequential growth. And my second question is in terms of your revenue increase sequentially but gross profit and gross margins declined. Is that a mix ed issue? Is there a tariff reimbursement can you talk about that, please?

Yes. I mean in terms of the Q2 and going forward, we will be seeing a similar momentum in the range, okay? So, we do not see any of the major concern on the momentum in terms of our revenues and order intakes. And in terms of the gross margins, what you said, even though it is slightly higher and it is lower than the last quarter because of some of the investments what we have made into our organization. So, the investments are where we have already budgeted and we already kept it because that is the one thing probably which is just driving up our gross margins slightly lower.

Got it. Thank you very much.

Thank you. O ur next question is fr om the line of Santhosh Seshadri with Avendus Spark. Please go ahead.

Yes. Hi, good evening. Thanks for taking up my questions. So, can you walk us through in detail on your?

Sorry to interrupt Santhosh , but your voice is slightly echoing. I request you to please use the handset mode while asking a question.

Is it better now?

So, my first question is on the targets to drive margin expansion in the medium term. Can you provide us some colour on how much of the margin expansion is coming from new categories like semiconductor equipment, AI servers and robotics. And also, how much of the expansion is coming from operating leverage?

As I said earlier, in the expansion phase, we will continue to do what we are doing it. And those are the industries which we will have having a focus that is basically our core we will continue that. We'll sustain that. And the new industries like AI data centres and robotics, coupled with some of the semiconductor capital equipment. I think those are the things, which probably expand us between FY27 and '29 now, which will be giving us the margins of I mean the EBITDA margins of 11% to 13%.

Okay. If I may add, I think today, the margin expansion or the -- what you're seeing is essentially because of filling the hopper and the operating leverage. What Rajendra talked about is in terms of what is going to come in the future, which will be added in addition to that part.

Thank you. J ust a follow up on that. So what product categories are we specifically targeting within AI data centres? Because just if I look at the margins of some of the global players in the AI server segment, it's in the mid -single digits. And given that we are anchoring on some of these new segments for long -term margin expansion. So, is it just the product margin -- no product category differe nce that is driving up margins o r do you see any inherent cost advantage for Indian players?

No, it is not an inherent cost advantage or anything. This is basically the products which we will be working out, which we're working for this AI and data centres and also the robotics, which is basically high -profile margin business. So, we have coming. So, as I said, we have -- I mean, we had the strategy and we have the strategy in place. We have put those action items, which are those products which we will be working in these areas -- in these new sectors. And what soever revenues we are going to have for the next 2 years and how that margin profile is going to be. So based on that, this is what we have put in there, where we will be going to be in FY27 and FY29 and in the expand phase.

Got it. And one final question. So, in terms of winning businesses in these new categories like robotics and AI. Do we -- so is it something that can be deliver ed with the existing capability or do we need some sort of acquired capability to gain exposure in these segments?

I think for all this, we can use our existing capabilities. And probably, we need to have some of the skill -- experienced people in some of the areas in terms of application engineering. So that's where, I think, we are working out. I mean, we have some of the people on board and some we probably will be getting the people on the board. But otherwise, the existing missionaries will be sufficient for us to execute that.

Thank you very much, sir. Good luck for your execution.

Thank you. Our next question is from the line of Deepak with Unifi Capital. Please go ahead.

Hello, sir. Thank you for the opportunity and c ongrats to the management on a good recovery. Sir, my question is around the order inflow. Actually, this INR550 crores order inflow run rate that we saw in this quarter. I just want to understand how much is it from the existing business, which is our core business, that is aerospace, defence, medical, etcetera. And from the new logos that you've onboarded last year, basically, I want to understand how much scale have you achieved from the sales efforts we did last year? And how much more can we juice out from the new logos addition? So that's the first question. Next thing is this INR550 crores. Were there any lumpy one-off orders in this o r this should be the new sustainable run rate for the company? And can one extrapolate this run rate for the full year? So that's the next question. And sir, thirdly, you mentioned AI data centres and robotics in your slide. So can you just give some details on what products and data centres that you're targeting or robotics that you're targeting, what capabilities that you've built in. So, I just want to hear the strategy that you guys have in place to get the business from these two new segments that you're targeting? Thanks.

Okay. I think in terms of the order intake, which we had, there was no lumpy order intake in that. That was all -- as you see from our existing customers plus the new customers. So -- and also your other question is are you going to maintain t he similar things for the year. A s I said earlier, so probably we'll be there at 1.5x of the book-to-bill ratio in that range for over the year also. And the other thing which we asked about is on mix between the new segment from the existing customers versus the new customers who m we added in the last 1 or 2 years. So, if you look at that one, probably close to around 70% of that is -- where it is from our existing customers and the balance 30% is from the new customers whom we added in the last 4 equipment, at least from the last four to six quarters.

And I take that to extend that to a question you asked, there's a lot of opportu nity still with those customers?

Yes, absolutely. There's a lot of opportunities from that existing on the new customers there. And the other thing which you asked about, I think earlier also I just mentioned about on the AI and data centres. I said we have the people on the board. We have put the strategy in place. Probably just we'll come back to you in the next two to three quarters when we will be seeing the products, which we are going to focus. And as I said, we don't need any additional capex for that. So existing mission could be sufficient for us to execute any of those products which we are looking at. And we also, as I said, we have some people on board who will probably working with our new prospects in these areas going and talking with them. So, I think it is going to be the expansion pl an from FY '27 to FY '29. So, this is what we just want to just make sure that the focus is there, that's

where the growth is going to be and that's where I think you'll be seeing both the revenue growth and also margin expansion both.

Okay. Sir, just on the order inflow run rate, you mentioned 1.5x order book to revenue. So, we are already at that rate today. So, if I assume that you're going to grow at a healthy 20%, 30% this year, your order book is already INR2,600 crores, which is more than 1.5x. So, what kind of number that we should look at in terms of order inflows for this entire, if you can help us understand that would be useful?

So, Deepak - probably, I think -- we're not giving that guidance in terms of the number right now. As I said, you'll be seeing it we'll be having 1.5 x is what I will just say that we'll be there for the year. Yes. So, I think the guidance is we are not giving that where you are going to be, what the order book is going to be by the end of the financial year.

Deepak, RMS here, I think Rajendra talked about aspirational revenue growth rates and the book-to-bill ratio. I'm sure you're good enough to calculate.

Okay. Thank you. All the best.

Thank you. Our next question comes from the line of Aditya pal with MSA Capital Partners. Please go ahead.

Hello, am I audible?

Yes. You are audible, sir.

Yes. Thank you so much and congratulations on the great set of results. A question for Rajendra. So just wanted to quickly understand because if I see over the last 3 years, right, there's been a lot of defence going very fast. Then petering out and th en completely vanishing from FY25 number and because of the Bell order then industrial seeing the up and down. But part of all this aerospace is the one place where we've continuously grown over the last 3 years on a quarterly run rate, we've expanded 4x. Wanted to understand what is t he strategy? How are we able to grow and maintain the space and also a large customer like Honeywell, Aerospace and Safran and Thales. They are more and more talking about that they want to expand outsourcing from India. How are we placed on that? So, it's a bit of under what has worked and how are we placed? So, a bit of a strategic question rather than a guidance question?

I think we are as probably I just mentioned earlier, so we are very well placed on the Aerospace side. I think Honeywell, we just mentioned about some of the big work which we had won several years back. I think that is where now right now, some of the initial builds are happening. So, we'll be seeing the ramp-up coming on those things in the next 18 months. So that's where we'll be seeing a big growth coming from the Honeywell Aerospace, so I think we had, I mean, we have a very good engagement with them at various levels. And that

account and you also said about the Thales, I think both of the accounts is where we'll be seeing an extraordinary growth in this year.

If I may just add to that. The aerospace business is a double -edged sword. It's very, very difficult to get into. But once you are in you're in. And we are fortunate that we're pretty much in with every single major OEM or significant Tier 1 that buys any electronics. I mean, obviously, Rajendra mentioned two Thales and Honeywell, those are the large ones, but there's also many, many others. So, I think it was a deliberate choice and now, of course, for the first few years, aerospace is always an investment but it was a deliberate choice to build a very strong aerospace business because aerospace and defence gives you a steady revenue stream on which we can build many other things. Like look at the data centre business, the reality of that is it is up now. It will go down that's just how some of these technology -related businesses work. But aerospace, what really differentiates us a strong aerospace capability because that's a moat that's impossible to or it's very, very difficult to reach for a new entrant, and we're in the moat and we’re very strongly placed in the moat. So, I think that's a very key element for us, and that's why I just want to highlight that.

Understood, understood. Just last question from my side, if I come back in the queue. So, one on the aerospace. So, SkyDrive has started receiving a lot of certifications from the aerospace or airplane authorities. And it is one of a large B2S pipeline. How are we , how are the discussion is going over there? Do you think that it can fructify much sooner than expected? And second is on the entire defence spend. And this again ties to that, we are in I would say, each and every European defence at this point of time. How are we seeing that pan out?

Starting with defence spend sorry, you're asking about the defence spending…

Yes, so two questions. One is on SkyDrive B2 S okay. A nd because they are getting certification much faster than expected, how because they will have to start making their aircraft. And the is there a possibility that we start booking the B2S revenues much sooner than expected on SkyDrive, if those are the discussions that's going on? And on the defence side, specifically on the European defence because the reason, I'm asking this is that because we are, I would say, in each and every defence company in the Europe side, maybe I mean bay systems, software and Thales then we also on boarded a few other defence companies over the last four, five quarters. How are we looking that panning out? So, two questions, both on aerospace and defence?

Okay. I think the one which you mentioned about is one it’s one of the Japan customer, which we mentioned earlier they’re all the EAVs which we are working out with them. And as I said, we are doing it currently, the engineering designs for their products for B2S products. And that

will be probably taking another year to an 18 months for us to come into the production line, okay? So that is a one which is a probably very high and it is a long term for us, as Krishna said those are the customers once we come in and particularly if they are on the build -to-spec, I think we are the ones who will be doing it throughout the life cycle of the product, we'll be maintaining the product there, okay. So that way, I think that is one business which we are very, very strong with that customer in Japan. And the other ones, which you said about other aerospace customers I think we continue with them. So, we are working with them the value that we provide. I think in terms of the…

Next, the second part is on the European defence. Aerospace I understood that Krishna and you also spoke in detail. But on the European defence, are we seeing a lot of negotiation pipeline building up on that side?

Yes, I think there is one right now, which we there is also a part of a build to spec, which we are working out with one of the European defence organization. So probably early stage at this point of time, that is there in our order pipeline. So, we are working now…

Is your question specifically B2S for European defence or European…

Not really. It is on the demand trend.

Okay. So, on the European demand something we said I think one of the thing which you already mentioned is Thales -- so we are working on with them. There is again a defence customer. So, we continue I think we are very, very strong in terms of our engagement with them, the value of what we provide to them. And we also have other defence customers in Europe, which probably I don't want to name it at this point of time based on the confidentiality agreement which we have with them. So, we are working on the build -to-print apart from what I said earlier is the build -to-spec even another one going on but build-to-print is continuing the momentum is still there, I think, very, very strong momentum, both in North America and Europe.

Understood. If I can just…

Sorry to interrupt we request you to please. We need to…

This one is last, if it's possible.

Please go ahead.

Yes. That's what I think we have now one project going on right now for one of the defence customer there. We have the ITAR facility, which as we said, is the ITAR certified one. So, we are working out with a few more other U.S. defence customers there. So, it is still at the early stages of our pipeline. But we see a value there, what we can bring into our customers in U.S., the defence customers in U.S.

Thank you. Ladies and gentlemen, we will now take one last question, which will be from the line of Anil Mehta with Equirus Securities. Please go ahead.

Yes. Hi, sir. Thank you for the opportunity and first of all very congratulations for a good set of numbers. Sir, my first question is that as we are doing an expansion phase in FY27 to FY29, particularly in the AI data centre and robotics projects, I just wanted to know in that segment, particularly in which product side that we are venturing is, [X 1:02:42] side or cooling side or power supply side that is least, if you can shed some light on that? Secondly is that how much incremental capex, particularly for the expansion phase and from the transformation phase that we are going to spend over the next couple of years. So, if these two things you can share. Thank you so much.

Sure. I think as I said probably earlier, so I think we're still working out on that to we have the strategy in place. I think the team is in place right now. So probably we will be let you know in the next two to three quarters, where the focus, which are the product lines which we are working, going to work and which are working out in that area, both in the AI data centres and the robotics. Okay. And the other one is the capex correct. The capex, I think, as you said, whatever we have today, closely around 1.75 x to 2x of the revenue. So, we don't need any such additional capex apart from a regular annual capex, which we'll be working out for our running the business.

Sure sir. Thank you so much.

Thank you. I would now like to hand the conference over to Mr. Krishna Bodanapu for closing comments. Over to you sir.

Thank you very much, and thank you, everybody, for joining the call this evening. Obviously, it's been a very good quarter. And again, I want to compliment Rajendra and his leadership team for delivering an excellent set of results. Also, I want to assure you that I think a lot of the challenges of the past have been overcome. We find ourselves in a very good position, both with the core business, which is aerospace, medical, defence and industrial, but also with some of the expansion that we're looking at, which includes semiconductor equipment , data centres, etcetera. So, I think we find ourselves in a good spot. So, thank you for your patience. Thank you for the support. We'll again speak next quarter, but I want to assure you that we will keep our focus on delivering again continuing to deliver a good set of results going forward. Thank you.

Thank you. On behalf of Cyient DLM Limited, that concludes this conference. Thank you all for joining us. You may now disconnect your lines.