Buy Cyient DLM; target of Rs 842: KR Choksey

KR Choksey is bullish on Cyient DLM has recommended buy rating on the stock with a target price of Rs 842 in its research report dated October 16, 2024.

Broker Research

October 17, 2024 / 11:04 IST

Buy

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KR Choksey's research report on Cyient DLM

Cyient DLM is firming its feet as integrated Electronic Manufacturing Services (EMS) provider, with a strong focus on critical solutions across the defense, aerospace, industrial, medical, and transportation sectors. The recent acquisition of Altek Electronics highlights Cyient's strategic intent to create synergies in the U.S. market, particularly in the industrial, medical and defense sector, supported by Altek’s ITAR certification. This acquisition is poised to strengthen Cyient’s industrial and medical segments, addressing concerns over the underlying weakness in these segments, while enhancing its defense capabilities in the U.S. The deal was executed at an attractive valuation of 0.78x price to sales (CY23-Sales), inclusive of a performance-based earn-out, reflecting financial discipline and strategic foresight.

Outlook

Accordingly, we project revenue, EBITDA, and net profit growth of 30%, 49%, and 59%, respectively, over FY24-FY26E. Based on these growth prospects, we initiate coverage with a price-to-earnings multiple of 43x on FY26E EPS (0.7x PEG) and a BUY rating, offering an upside of 18% (Target price: ₹842) from the current market price.

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