Mutual Funds Commodities Research Tax Planning IPO Our Team Contact Us  

| More

Cyient - 'Persistent' in the making! - ICICI Securities

Posted On: 2021-01-21 22:27:09 (Time Zone: Arizona, USA)

With the objective of accelerating growth and improving profitability, Cyient announced some structural changes which, prima facie, appear promising. These include realignment of its Go to Market (GTM) organisation, higher focus on large deals, process discipline and incentive structure to align employee interests with that of shareholders, etc. Taking cues from recent successes at Mindtree, Persistent, etc., and subject to good execution, the proposed changes in Cyient can improve sales productivity and bring the long pending turnaround. Robust increase in the order intake (~US$195mn, +53% QoQ) with a significant share of it coming from multi-year deals (US$106mn) is a big surprise. With these structural changes and strength in order booking, medium-term revenue growth and margin prospects appear brighter. We expect earnings growth of 25% over FY21E-FY23E. Stock is trading at a significant discount (67% on FY22E) to peers like LTTS. With the likelihood of a unit level improvement on the horizon, we see strong scope for rerating. Cyient remains our TOP BUY idea in the small-cap space.

- In-line revenues; slight margin miss: Consolidated revenues grew 4.1% QoQ (CC) led by strong growth in DLM (+25% QoQ). Growth in services (+0.3% QoQ, CC) was tepid. Within services. growth was driven by E&U (~14% QoQ growth) and communications (5%). Rest of the verticals either remained largely stable or reported revenue declines with Aerospace & Defence (-5.7%) continuing to be the biggest overhang. Barring EMEA (-8%), the other two geographies reported healthy growth.

Sequentially, EBIT margins contracted ~90bps in services segment. Impact on merit increase (-95bps), furlough impact (-90bps) and increase in other direct costs (-55bps) were the key margin headwinds. Improvements in operational metrics (+78bps), lower restructuring costs (+45bps), volume impact and lower spend on SG&A / depreciation (+30bps) were the key tailwinds. Adjusted for DLM impact, overall EBIT margins largely remained stable.

- Robust order intake; expect strong earnings growth over FY21E-FY23E: Robust order intake of ~US$195mn (+53% QoQ) came in as a big surprise. Notably, the company signed five multi-year deals with contract potential of US$106mn. This indicates the company is showing higher focus and seeing better success in winning multi-year deals vs short-duration and small-sized deals, which was the norm earlier. Besides improving revenue growth visibility, this should also drive margin expansion over the medium term.

- Good likelihood of rerating: With the aforementioned structural changes and strength in order booking, medium-term revenue growth and margin prospects appear brighter. We expect earnings growth of 25% over FY21E-FY23E. Stock is trading at a significant discount (67% on FY22E) to peers like LTTS. With the likelihood of unit level improvement on the horizon, we see strong scope for rerating. Cyient remains our TOP BUY idea in the small-cap space.

Shares of Cyient Limited was last trading in BSE at Rs.507.45 as compared to the previous close of Rs. 501.8. The total number of shares traded during the day was 69769 in over 2997 trades.

The stock hit an intraday high of Rs. 526.9 and intraday low of 501.05. The net turnover during the day was Rs. 36025222.

Source: Equity Bulls

Click here to send ur comments or to

Disclaimer:The article above is a gist / extract of the original report prepared by the research firm / brokerage firm. This article is not to be considered as an offer to sell or a solicitation to buy any securities. This article is meant for general information only., its employees or owners or the research firms, its employees or owners won't be responsible for any liability that may arise from information, errors or omissions in these articles. or its employees or owners / the research firms or its employees or clients or owners may from time to time hold positions in securities referred in this article. For detailed research reports, please contact the concerned research firm directly.

Other Headlines:

Wipro - Beware of integration / impairment risks! - ICICI Securities

Easy Trip Planners Ltd - IPO Review - ICICI Direct

ICICI Direct - Derivatives Weekly View (March 5): Level of 14700 remains crucial for upsides to continue...

Easy Trip Planners Ltd. - IPO - Strong Financials - Reliance Securities

Bharat Forge - Initiating Coverage - Constant evolution - HDFC Securities

Mahindra Logistics - Large-ticket deal win - ICICI Securities

Company Update - Huhtamaki India - ICICI Direct

Gladiator Stocks: IndusInd Bank, VIP Industries - ICICI Direct

Warehousing demand expected to grow around 160% to reach 35 million sq. ft in 2021: JLL

Telecom - Spectrum auction: Prudent investment by Bharti Airtel - ICICI Securities

JB Chemicals & Pharmaceuticals - Analyst meet takeaways - ICICI Securities

IPO Review - MTAR Technologies Ltd - ICICI Direct

Auto Sector - Monthly Volume Round-up - Feb 21 - Decent YoY Growth Continues

Aditya Birla Fashion and Retail - Focus on scaling up new businesses - ICICI Securities

Automobiles (wholesale) - Wholesales push continues despite modest retail trends - ICICI Securities

Aditya Birla Capital - Thoughtful (inclusive) conglomerate business evolution commands premium - ICICI Securities

Jubilant Foodworks - Buying in-the-money options - ICICI Securities

Multi Commodity Exchange of India - Play on rising commodity prices? - ICICI Securities

Gladiator Stocks - Sudarshan Chemical - ICICI Direct

Monthly Commodities Outlook - March 2021 - ICICI Direct

ICICI Direct - Monthly Currency Outlook: Rupee to depreciate further towards 75.00 level...

ICICI Direct - Covid Recovery Pulse - E-way bill generation in February 2021 starts on strong note...

Company Update - Virtual JLR Investor Event - Tata Motors - ICICI Direct

Analyst Meet Update - Aditya Birla Fashion and Retail - ICICI Direct

MTAR Technologies Ltd. - IPO - Huge Opportunities from Clean Energy Bodes Well - Reliance Research

ICICI Direct Derivatives Weekly View (February 26): Failure to move above 14700 may extend declines towards 14300...

Bank: Sector Credit Trends - Slows, Yet again - HDFC Securities

Piramal Enterprises - Pharma day highlights - ICICI Securities

Polymer price tracker - PVC prices rise sharply again! - ICICI Securities

Greenply Industries - Growth returns, at an inflection point - ICICI Securities

Tata Motors - JLR future proofing itself with rapid electric transition - ICICI Securities

Dairy - Higher freight cost and increase in Global SMP prices - ICICI Securities

Analyst Meet Update - Nestlé India (Hold): Focus on product innovation, expanding rural reach - ICICI Direct

MTAR Technologies Ltd - A strong player in booming high precision engineering... - Geojit

Rollover Report for February - March 2021 : Angel Broking

Reaction from industry experts on Q3FY21 GDP numbers

M. Govinda Rao, Chief Economic Adviser, Brickwork ratings on Q3FY21 GDP numbers

Mr. Dhiraj Relli, MD & CEO, HDFC securities views on Q3FY21 GDP Growth Number

Suman Chowdhury, Chief Analytical Officer, Acuité Ratings & Research on Q3FY21 GDP

Rollover Analysis - Feb 21, 2021 - YES Securities

Consumer Durables - Demand-driven recovery continues - HDFC Securities

Cement - Demand surprises; earnings upgrade to continue - ICICI Securities

Gladiator Stocks - TeamLease Services - ICICI Direct

Gladiator Stocks - Metals to outshine post multi-year breakout... - ICICI Direct

Company Update - Sundaram Finance - ICICI Direct

Indian pharmaceutical industry to meet an ambition of US$130 billion by 2030 through innovation-led growth: EY-FICCI report

4th Industrial Conclave - Bullish undertone, favourable valuation - HDFC Securities

Sanofi India - Weak quarter; sequential improvement - ICICI Securities

Sunteck Realty - All eyes on upcoming launches - ICICI Securities

Company Update - Tata Motors - ICICI Direct

Website Created & Maintained by : Chennai Scripts
West Mambalam, Chennai - 600 033,
Tamil Nadu, India

disclaimer copyright © 2005 - 2020