Buy Cyient; target of Rs 1610: Axis Securities

Axis Securities report on Cyient

In Q1FY24, Cyient reported revenue of Rs 1,69 Cr, up -4% QoQ and 35% YoY. The company’s operating margins improved by 283bps QoQ to 14.2%. The Services’ operating margins grew by 60bps QoQ to 15.3%, led by efficient execution during the quarter as well as currency translation. The company’s net profit for Q1FY24 stood at Rs 177 Cr, registering a growth of 52% YoY. The management expects overall revenue growth in FY24 in the range of 15%-20%, which if materializes, would be indeed strong given the prevailing challenging times. The said growth would be driven by Communications growth (led by Network Transformation), E&U (benefiting from the IG partner's acquisition), and Transportation growth (led by the Rail segment). The deal pipeline continues to look healthy at $192 Mn.

Outlook

We recommend a BUY rating on the stock and assign a 16x P/E multiple to its FY25E earnings of Rs 81.8/share to arrive at a TP of Rs 1,610/share, implying an upside of 10% from the CMP.

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