Buy Cyient; target of Rs 600: Motilal Oswal
Motilal Oswal is bullish on Cyient has recommended buy rating on the stock with a target price of Rs 600 in its research report dated July 13, 2017
Motilal Oswal's research report on Cyient
Rangsons (DLM) dragged performance vis -à- vis expectations on both revenues (3% impact) and margins (60bp impact) front . Having started the year at USD12m, the company maintained its outlook of 20% growth , citing healthy visibility to reach USD65m for the full year (we estimate 12% growth). Operating loss of INR53m in DLM also dragged the EBITDA margin by 50bp QoQ to 12.8% v/s our estimate of 13.2% (ex-DLM margin was 13.3%). PAT of INR878m (+18.6% QoQ) came in below our estimate of INR955m, led by operational miss. Also, the reported tax rate during the quarter was 31%, but 27% excluding one -offs.
We see favorable risk-reward at 14.5/12.5x FY18/19E earnings. Our price target of INR600 discounts FY19E earnings by 14x. Buy.
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