Buy Cyient; target of Rs 2100: Motilal Oswal

Buy

Motilal Oswal's research report on Cyient

DET business reported 2QFY25 revenues of USD173m, up 1.3% QoQ in CC vs. our estimate of 1.0% growth. Cyient reported broad-based growth in revenues across verticals, except Sustainability (down 6.45 QoQ cc). EBIT margin of the DET business was up 75bp QoQ/down 232bp YoY at 14.2%, above our estimates of 12.7%. Service order intake was muted at USD156.8m, down 14.7% YoY. DET PAT grew 24.9% QoQ/2.2% YoY to INR1,768m (est. INR1,427m). For 1HFY25, DET revenue/EBIT/PAT declined 2.3%/17.0%/7.3% vs. 1HFY24. In 2HFY25, we expect DET revenue/PAT to grow by 2.8%/4.9% and EBIT to decline 2.3% YoY. Our SOTP-based TP of INR2,100 implies an upside of 18%.

Outlook

We maintain our BUY rating on the stock, mainly owing to undemanding valuations and exposure to structurally strong verticals such as aerospace and sustainability. Our SOTP-based TP of INR2,100 implies an upside of 18%.

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Cyient_25102024_Motilal Oswal