Cyient DLM In Talks For More Acquisitions After $29-Million Altek Electronics Deal: CFO

Cyient DLM has more inorganic growth plans on the cards after the acquisition of US-based Electronic Manufacturing Services provider, Altek Electronics, according to the company’s Chief Financial Officer Shrinivas Kulkarni. The company completed the acquisition of Altek Electronics in a $29.2-million deal on Oct. 4. The EMS provider is based in Connecticut’s Torrington, a two-hour drive from New York. 

Speaking to NDTV Profit, Kulkarni said that inorganic activities and acquisitions will continue to be a part of the company’s expansion strategy.

“Right now, there is nothing on the horizon that can close immediately, but we are in the early stages of talks with a few companies,” he said.

Talking about the recent deal, Kulkarni said Altek Electronics was into printed circuit board assembly, cable wire harness and box builds, with over 90% of its business coming from the industrial and medical sectors.

“This actually blends with what we have. Our focus is on defence and aerospace, so this diversifies our portfolio quite well,” the top executive noted.

Kulkarni added the impact of the deal would be seen in Cyient DLM’s financials from the current quarter. While there would be a one-off impact in the current quarter due to the expenses of the transaction, the deal would be accretive from the word go, he said.

“This financial year we will settle down the acquisition, and from the next financial year we will be seeing the full benefit of it,” Kulkarni said.

Altek Electronics generated a revenue of $37.2 million in the calendar year 2023, with about 10.5% Ebitda margins. 

Kulkarni said Cyient was paying six times their Ebitda upfront, which amounted to $23.4 million, and another performance-linked amount of $5.8 million. This took the total transaction amount to $29.2 million.

Cyient would fund part of the transaction through funds received from its initial public offering, launched in June .

“We are paying the upfront amount with proceeds raised during our IPO, so 50% of the amount comes from there and the balance 50% comes through debt,” the CFO explained.

The acquisition is also expected to benefit Cyient’s topline.

“Altek will add $4 million to Ebitda and $40 million to topline, and also there are synergies and growths that are there,” Kulkarni said.

However, the blended margins would be marginally accretive.

“We are also operating in a similar number in terms of Ebitda. We are around 9% to 9.5% right now, while this acquisition is around 10% to 10.5%. So, it will be moderately accretive, but not in a substantial way,” Kulkarni added. 

Cyient DLM share price gained over 1.6% intraday on Monday to touch a high of Rs 693 apiece on the NSE on Monday. The stock, however, gave up the early gains and was trading 0.56% lower at Rs 678 apiece against the benchmark Nifty 50's decline of 0.93%