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 October 12, 2017.
Motilal Oswal's research report on Cyient
4.2% QoQ growth in Services and 34% QoQ growth in Rangsons drove in-line revenue growth of 6.5% QoQ. Double-digit growth expectations for FY18 get validated by the performance so far, placing CYL strongly against peers. Robust revenue growth and improved operational efficiencies drove 160bp QoQ margin expansion to 14.6%, despite part wage hikes and a flat INR. Operational beat and higher-than-expected other income led to PAT of INR1.1b (+27.4% QoQ), a beat of 6%.
At current momentum, we expect CYL to continue leading industry growth (~12% YoY CC in FY18E), and over the longer term, it remains well placed to address opportunities in the Engineering and Defense segments. Additionally, while spend in the Aerospace industry has been changing, CYL has been successfully transforming its offerings to maintain relevance to its customers and continue growth. We see favorable risk-reward at 14.4/12.4x FY18/19E earnings. Our price target of INR600 discounts FY19E earnings by 14x. Buy.
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