The reagent used is DIBAL-H, which stands for Diisobutylaluminium hydride. It is a selective reducing agent.
DIBAL-H is commonly used to reduce esters and nitriles to aldehydes. It is a bulky and electrophilic reducing agent.
The reaction proceeds in two steps:
(i) The nitrile (R-CN) reacts with one equivalent of DIBAL-H. The DIBAL-H adds a hydride to the carbon of the nitrile group, forming an intermediate imine-aluminium complex. The reaction is typically carried out at low temperatures (e.g., -78$^\circ$C) to prevent further reduction.
R-C$\equiv$N + H-Al(i-Bu)$_2$ $\rightarrow$ R-CH=N-Al(i-Bu)$_2$
(ii) The intermediate complex is then hydrolyzed by adding water (H$_2$O). The hydrolysis cleaves the C=N bond and replaces it with a C=O bond, yielding an aldehyde (R-CHO).
R-CH=N-Al(i-Bu)$_2$ + H$_2$O $\rightarrow$ R-CHO + other products
Therefore, the functional group "Y" is an aldehyde group, --CHO.