Sell Cyient; target of Rs 1000: Motilal Oswal

Sell

Motilal Oswal's research report on Cyient

Cyient (CYL)’s DET business reported a 3QFY26 revenue of USD167m, up 1.9% QoQ in constant currency (CC) terms, above our estimate of 1.0% growth. Transportation & Mobility grew 2.9% QoQ CC, while Network & Infrastructure rose 2.5% QoQ CC. Adj. EBIT margin of DET business at 12.4% missed our estimate of 12.6%. DET Adj. PAT was up 9.1% QoQ/40.2% YoY at INR1,496m (est. 1,486m). This excludes the one-time post-tax impact of INR288m on account of changes in labor codes.

Outlook

Based on SoTP, we value the company’s stake in DLM at a market valuation with a holding company discount of 20%. In our P/E-based valuation, we value the DET business at 17x FY28E EPS (earlier 16x). Our SoTP-based TP of INR1,000 implies a 12% potential downside.

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