SPA Research's research report on Cyient
Cyient’s Q2FY17 numbers were above our estimates with positive surprise on the revenue and operating margin front. Revenue grew QoQ by 9.4% to INR 9136mn (SPAe: INR 8560mn) while PAT grew by 31% to INR 973mn (SPAe: INR 988mn). PAT would have been higher but for higher tax rate at 25% for the quarter. Management has guided for average tax rate of 23% for FY17. Operating margin improved by 98bps QoQ to 14.04% due to higher utilization. Order intake for Q2FY17 was $ 144.7mn of which $ 121.4mn is executable in FY17. We maintain our BUY rating with TP of INR 575 (15x FY18E EPS).
The company started reporting order intake data from Q1FY17 which is showing 31% growth YoY in executable orders in FY17. While we would not like to read much from two quarters data, growth across major business units and geographies indicate that the organizational structure put in place in Q4FY16 is yielding desired result of countering revenue volatility by reducing incidence of growth in one business unit being compensated by another. We maintain our BUY rating with TP of INR 575 (15x FY18E EPS).For all recommendations, click here
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