Shares of Cyient took a strong beating on January 24, plummeting over 19 percent amid a slew of negative triggers for the company. Firstly, the IT company's weak Q3 numbers dented sentiment. Making matters worse, the company slashed its FY25 revenue growth guidance to -2.7 percent against the previous expectation of flattish growth.
Thirdly, the company's CEO Karthikeyan Natarajan resigned from his post, prompting promoter Krishna Bodanapu to take over as the interim CEO. The developments not just weighed down on investor sentiment but also triggered analysts to cut their earnings estimates and target prices for Cyient, further exacerbating the pain.
At 10.04 am, shares of Cyient were trading at Rs 1,424.95 on the NSE.
Cyient's management began FY25 with a high single-digit revenue growth target, but this has been steadily downgraded to a guidance of a 2.7 percent decline. "The weak exit rate further clouds growth prospects for FY26. While inexpensive valuations cap the downside, we remain negative on Cyient," brokerage firm Nuvama Institutional Equities wrote in a note.
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The brokerage also cut its FY25 and 26 EPS estimates by 10.8 percent and 4.5 percent, respectively, on account of lower growth and margins. It also reduced its target price to Rs 1,660 while retaining a 'sell' call on the stock.
The downward revision in Cyient's growth guidance was also prompted by a 31.56 percent fall in its net profit to Rs 127.7 crore in Q3 FY25 compared to Rs 186.6 crore in the preceding quarter. Revenue posted a minor 0.5 percent growth sequentially to Rs 1,909.8 crore.
While HDFC Securities took cognizance of Cyient's in-line Q3 results, it stated that the guidance cut, weak exit margin, and CEO's resignation came as negative surprises. Accordingly, HDFC Securities slashed its revenue estimate for Cyient by 2 percent and EPS estimate by 5 percent to factor in slower growth and weak margins.
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