Cyient Ltd - Q2FY21 Company Update - ICICI Securities

Cyient Ltd (Cyient) reported a decent set of Q2FY21 numbers. Dollar revenues increased 3.4% QoQ (1.3% in constant currency terms) led by 1.7% QoQ growth in services revenues and 13.3% QoQ growth in DLM revenues. The growth in services revenues was led by communication (28.4% of revenues), up 7.7% QoQ and transportation (14.3% of revenues) up 21.6% QoQ, partially offset by a decline in aerospace & defence (27% of revenues), down 11.5% QoQ and semiconductor, IoT and analytics (5.3% of revenues) down 2.3% QoQ. In terms of margin, services EBIT margins increased 542 bps QoQ to 12.2% led by higher utilisation, lower subcontracting cost and lower restructuring cost.

Valuation & Outlook

Going forward, the company expects communication, transportation and medical segment to drive revenue growth and believes aerospace revenues bottomed out in Q2FY21. Hence, we expect revenues to improve on a QoQ basis, going forward. In terms of margins, we expect the company to post a healthy improvement in FY22E and FY23E led by various cost rationalisation measures undertaken by the company. Hence, we upgrade the stock from HOLD to BUY with a revised target price of Rs. 440 (10x FY23E EPS).

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_Cyient_CoUpdate_Oct20.pdf

Shares of Cyient Limited was last trading in BSE at Rs.389.1 as compared to the previous close of Rs. 366.3. The total number of shares traded during the day was 212678 in over 4790 trades.

The stock hit an intraday high of Rs. 391.95 and intraday low of 370. The net turnover during the day was Rs. 80349948.

Source : Equity Bulls

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