Cyient Ltd. share price target

Revenues in rupees grew 1.8% QoQ to | 830.6 crore above our 0.2% QoQ decline and | 814 crore estimate. EBITDA margins increased 10 bps QoQ to 13.1% and were above our 12.9% estimate. Margin tailwinds from operational efficiency were offset by a partial wage hike and the weak performance of Rangsons at the operational level Reported PAT of | 73.4 crore was marginally below our | 80.6 crore estimate on account of lower other income (| 11.6 crore vs. 22.2...

Cyient's revenue growth would have been higher by ~170bps but for QoQ decline in Rangsons' revenue, which the company had guided for in Q4FY16. Services business grew by 5.4% QoQ and was driven by a broad based growth across Cyient's focus verticals Aerospace & Defence (38.7% of revenue, +4.9% QoQ), Communications (18.9% of revenue, +13.4% QoQ) and transportation (10.3% of revenue, +9.3% QoQ). North America (60% of revenue) grew at a strong pace of 6.9% QoQ. Q1FY17 growth was lead by an 11.8% QoQ growth in top-10 clients (55.7% of revenue). No. of...

Cyient's revenue growth would have been higher by ~170bps but for QoQ decline in Rangsons' revenue, which the company had guided for in Q4FY16. Services business grew by 5.4% QoQ and was driven by a broad based growth across Cyient's focus verticals Aerospace & Defence (38.7% of revenue, +4.9% QoQ), Communications (18.9% of revenue, +13.4% QoQ) and transportation (10.3% of revenue, +9.3% QoQ). North America (60% of revenue) grew at a strong pace of 6.9% QoQ. Q1FY17 growth was lead by an 11.8% QoQ growth in top-10 clients (55.7% of revenue). No. of...

Cyient’s core business, which was under stress for the past six quarters, registered 5.3% growth and DNO and engineering grew 6.1/4.9% QoQ, mostly fueled by growth from the top-5/10 clients. Rangsons was down 22% QoQ (seasonality). The management is optimistic about revival in the core business (double digits) and guided for ~50% growth in Rangsons. However, a flat margin outlook for FY17E led by higher investments in the business (earlier guided for 150bps improvement for FY17E) was a disappointment.The stock is fairly valued at 12.6x FY18E EPS. HDFC Securities retain NEUTRAL with a TP of Rs 508 at 13x FY18E earnings.

Trendlyne has 8 reports on CYIENT updated in the last year from 3 brokers with an average target of Rs 512.7. Brokers have a rating for CYIENT with 3 price upgrades in past 6 months.

Services traction offset by margin outlook :Broad-based services traction: CYL’s 1QFY17 revenue grew 2.6% QoQ (and 2% QoQ in constant currency) to USD124m, compared to our estimate of USD123m. Services business grew 5.4% QoQ to USD115m (v/s our estimate of USD113m), registering the highest growth in 7 quarters. Services business grew across the board with the exception of Utilities & Geospatial. Motilal Oswal price target of INR550 discounts FY18E earnings by 13x. Maintain Buy.

Trendlyne has 8 reports on CYIENT updated in the last year from 3 brokers with an average target of Rs 512.7. Brokers have a rating for CYIENT with 3 price upgrades in past 6 months.

Background: Cyient is a mid cap IT Company with FY16 revenues of INR 30.9bn specializing in engineering solutions, including product development and life cycle support, process, network & content engineering. In 1QFY17: Ex- Design & manufacturing business, revenue shares by geography: Americas (60.0%), Europe, Middle East, Africa & India (24.6%), and Asia Pacific (15.4%). Revenue share by business unit: Aerospace & defense (38.7%), Transportation (10.3%), Industrial energy & natural resources (10.0%), Semiconductor (4.3%), Medical & Healthcare (1.9%), Utilities (15.8%), Communication (18.9%), Utilities & Geospatial (15.8%) and others (0.1%). Onshore/Offshore split: Onshore (40.7%), Offshore (59.3%). Revenue contribution: Top 5 clients (40.2%), Top 10 clients (55.7%). Total employee: 12,965, (billable:...

ICICI Securities Ltd | Retail Equity Research We attended Cyient's full house, analyst day in Hyderabad wherein the company reflected on the issues that plagued FY16 growth and, at the...

With another muted quarter, Cyient?s core business, DNO and Engineering, grew only 1/0.5% QoQ/YoY, mostly fueled by Rangsons (up 13.8% QoQ). But the management is optimistic about growth revival in the core business (lower double digits) and guided for ~50% growth in Rangsons. The company has laid out a new promising organisational structure (eight new units), but how much it pays off, only time will tell.