Cyient Ltd. share price target

Cyient's growth engine is challenged given client specific issues. Large verticals, Aerospace and Communications are taking longer than expected to recover. Further margins expansion will be difficult considering investments required in the business and tight labour market. We expect USD revenue growth of 7.8/9.3% and EBITDA% of 14.0/14.2% for FY20/21E. The buyback of Rs 2bn is completed at an average price of Rs 640/share. Net Cash stands at Rs 7bn (~10% of Mcap). The stock trades at reasonable valuation of 12.4x FY20E which is ~49% discount to LTTS. Risks to our thesis include prolonged issue with top clients and slowdown in DLM. We maintain BUY on Cyient based on in-line 4QFY19. Given the single digit growth in services business, we cut P/E multiple to 14x vs. 16x earlier. Our TP Rs 725 is based on 14x FY21E EPS.

Revenue growth expected to be more back ended FY19 services revenues were in single digits i.e. 7.6% vs. guided double digit growth at the start of the year & lower than the revised guidance (of 8.5%9.5%) in Q3FY19. This was mainly due to lack of talent availability and demand deferral by large client in the A&D; and communication segment. The company is addressing talent specific issues and has also incorporated risks on the demand front in providing guidance. The company also has a healthy book to bill ratio of 1.29x in Services and 1.07x in DLM business leading to overall book to bill ratio of 1.26x. As a result, the company expects...

Cyient Q4FY19 revenue de-grew by 0.3% QoQ in CC terms to USD 165.2 mn below our estimate. However, in FY19 revenue grew 10.1% YoY to US$660 mn in CC terms. In Q4FY19, Services revenue stood at $ 146.9 mn; growth of 1.7% QoQ (1.4% in CC), 2.9% YoY. On a consolidated basis, operating...

25 April 2018 For FY19, CC revenue grew 10.1% YoY contributed by Services (88% of revenue) growth of 7.6% YoY CC and DLM growth 29.3% YoY (13% organic), EBITDA increased 17.3% YoY and net income rose 14% YoY. Including INR2b worth of buyback, the payout for FY19 stood at 82% of net profit. For 4QFY19, revenue was flat YoY (our INR1.25b). EBITDA margin expanded 30bp QoQ to 15.1%, in line with our estimate of 15.3%. EBITDA margin in Services was at 16.4% and in DLM at 4.1%. Significant net income beat was driven by INR521m of other income, which came outside forex and cash yield.

Cyient (CYL) has cautioned about a weak Q4FY19, impacted by client specific issues in both services and DLM business. Thus it will miss its FY19 revenue guidance. The services business has seen deals for some of its key clients in Aerospace & Defense and Communications verticals (58% of services revenue) being deferred to FY20. While DLM business was impacted by delay in regulatory clearances for one of its client. We cut our consolidated revenue (in US$) and EPS forecast for FY19/20 by 2.1%/2.2% and 4.7%/4.8% respectively. We introduce FY21 financials and factor the impact of...

Engineering Research and Development (ER&D;) is the next -gen IT services having huge opportunity; Pole position in ER&D; with Domain Expertise; We initiate coverage with BUY rating and a target price of Rs. 803 i.e. 23% upside.

Maintain BUY with a TP to Rs 790, implying 16x Dec-20 earnings. Cyient delivered weak performance in 3QFY19 on revenue front while margin expansion was a positive. Revenue at USD 165.1mn was down 2.2% QoQ, -1.5% in CC (vs our est. of USD 168.1mn). Services (88% of rev, -0.2% QoQ CC) growth was below expectation while DLM (12% of rev, -10.3% QoQ) fall was less than expected. Aerospace & Defence (34.3% of rev, +0.5% QoQ) has been stable in a seasonally weak quarter.

Q3FY19 consolidated revenue (-2.2% QoQ in US$) was in-line with our forecast. However, services revenue decline of 1% QoQ was a miss. While EBIT margin improvement of +100bps QoQ to 14.7% was a beat to our forecast, EPS (-28% QoQ) was a miss impacted by FX loss and no export incentives. CYL has cut its FY19 services revenue growth guidance to 8.5%-9.5% in CC vs. doubledigit growth earlier and now expects consolidated EBITDA margin to remain flat YoY vs. +50bps earlier mainly on account of recent INR appreciation. CYL confirmed that the board would reconsider share buyback in the next few weeks itself. We cut our consolidated revenue forecast for FY19/20 by 2%/5.6% and EPS by...

US$ revenues declined 2.3% QoQ to $165.1 million (below our estimate of $167.5 million) mainly led by 1.0% QoQ decline in services revenues and 0.5% QoQ decline in the Design Led Manufacturing (DLM) business (Rangsons) revenues...

17 January 2019 CYLs 3QFY19 USD revenue decline of 2.1% QoQ was largely in line with our estimate. In Services, revenue declined 0.2% QoQ CC, in line with our flattish growth expectation. EBITDA margin expanded 100bp QoQ to 15.7% (90bp beat) as a result of higher operational efficiency and lower SG&A; costs (20.3% v/s our estimate of 21.2%). PAT declined 27% QoQ to INR921m, led by higher-than-expected forex losses. revenue was anticipated on account of seasonality, the 3.3% decline in Communication was a surprise. YoY growth is now down to 6.5% (the segment grew 24% last year), led by a large contract getting pushed to 4Q. back of a tepid 3Q with flattish Services revenues, CYL moderated its Services revenue growth guidance to 8.5-9.