Cyient Ltd. share price target

Background: Cyient is a mid cap IT Company with FY17 revenues of INR 35.9bn specializing in engineering solutions, including product development and life cycle support, process, network & content engineering. In 4QFY17: Ex- DLM business, revenue share by geography: Americas (57.1%), Europe, Middle East, Africa & India (25.1%), and Asia Pacific (17.8%). Revenue share by business unit: Aerospace and Defense (35.7%), Transportation (9.7%), Semiconductor (4.2%), Medical & healthcare (1.9%), Utilities & Geospatial (18.5%), Communication (21.4%). Design Led Manufacturing Business: Revenue by segment, Aerospace and defense (9.2%), Industrial (20.6%), Medical (9.7%), Communication (59.3%) and others (1.2%). Onshore/Offshore split: Onshore (39.2%), Offshore (60.8%). Revenue contribution: Top 5 clients...

ICICI Securities Ltd | Retail Equity Research US$ revenues grew 3.8% QoQ to $141 million and were below our 4.3% QoQ growth and US$141.7 million estimate. In constant currency terms, revenue grew 3.6% Revenues in rupees grew 2.6% QoQ to | 941 crore, below our 3.3% QoQ growth and | 947.6 crore estimate EBITDA margins declined 10 bps QoQ to 13.3%, below our 14.0% estimate. Margins were adversely impacted mainly by below...

Cyient 4Q numbers were decent on the revenue front, owing to a revival in the core engineering business (52% of revenue, 3.5% QoQ). Management is optimistic about Cyient?s growth targets. It has guided for double-digit growth in the core business (ex-DLM), 20% YoY growth in DLM and a 50bps margin expansion.

business grew by 3.2% QoQ (in US$), in-line line with our forecast. However the DLM business grew by 8.7% QoQ, beat our forecast....

Commendable Show on All Counts; FY18 Looks Encouraging Cyient has delivered a strong show in 4QFY17 - on expected lines - with its USD revenue growing by a healthy 3.8% QoQ (3.6% in CC terms) to US$141mn. A healthy 3.3% sequential growth in Core Services business is a positive factor, in our view. While the DNO business grew by a good pace of 3% QoQ, the ENGG business clocked a solid 3.5% QoQ growth. DLM segment grew by 8% QoQ vs. our expectation of double-digit growth. The Management looks forward to an encouraging FY18 with double-digit growth in the Core Services business, 20% growth in DLM, 50bps expansion in EBITDA margin (led by Core Services) and double-digit growth in earnings....

Services business: Cyient reiterated its FY17 outlook of a double digit growth in the services business, in-line with our forecast of 11.9% YoY growth in US$. Importantly, Cyient is targeting to maintain the growth momentum in FY18 and has good visibility for the same. Cyient expects the growth to be led by the growth in top-10 clients and supported by top11-20 clients. It expects the large verticals to drive the growth and its outlook is as follows: Aerospace & Defense (35.6% of revenue) Cyient has maintained its positive outlook on this segment and sees strong traction in manufacturing engineering and post production/ maintenance/repairs solutions in Aerospace. It also has a positive outlook for the defense...

Cyient's dollar revenues declined 0.5% QoQ to $135.8 million below our 1.7% sequential growth and $138.8 million estimate. Constant currency (CC) revenues grew 0.6% QoQ Revenues in rupees grew 0.4% QoQ to | 917.1 crore below our 2.4% QoQ growth and | 935.5 crore estimate EBITDA margins declined 60 bps QoQ to 13.4%, below our 14.2%...

Background: Cyient is a mid cap IT Company with FY16 revenues of INR 31.0bn specializing in engineering solutions, including product development and life cycle support, process, network & content engineering. In 3QFY17: Ex- DLM business, revenue share by geography: Americas (58.0%), Europe, Middle East, Africa & India (24.0%), and Asia Pacific (18.0%). Revenue share by business unit: Aerospace and Defense (35.6%), Transportation (9.4%), Industrial energy & Natural resources (9.3%), Semiconductor (3.9%), Medical & healthcare (1.9%), Utilities & Geospatial (17.2%), Communication (22.7%). Design Led Manufacturing Business: Revenue by segment, Aerospace and defense (46.3%), Industrial (17.1%), Medical (11.3%), Communication (24%) and others (1.3%). Onshore/Offshore split: Onshore (40.4%), Offshore...

Cyients delivered a muted quarter both on revenue and margin front due to continued stress in the Core engineering business (54% of revenue, -4.1% QoQ). Growth was largely fueled by Utilities, Geo & Comm (UGC) 2.0% QoQ and Rangsons (DLM) ( 10% QoQ). The management remains optimistic; guided for double digit growth in core business (ex-DLM) and 50% YoY growth in DLM.

lower than our forecast. EBIT margin declined by 80bps QoQ to 10.7% missing our forecast. As a result, EPS of Rs8.4, -3.3% QoQ was also a miss. Revenue from top-5 clients continued to outperform the company growth and was +0.2% QoQ, post a 16% CQGR in H1FY17. During the quarter US$10m+ clients grew by 1 QoQ to 11 and US$5m+ clients grew by 2 QoQ to 21. Cyient added 20 new clients in Q3FY17. For FY17, Cyient has reiterated its guidance for core business revenue growth of 10%+ and a 50% growth in DLM (design led manufacturing) business i.e., Rangsons. It has also maintained its EBITDA margin target of flattish margin YoY resulting in a double digit earnings growth....