Buy Cyient; target of Rs 2230: Anand Rathi

Buy

Anand Rathi's research report on Cyient

With 2% q/q growth (1.3% in CC),aided by broad-based growth across verticals, Cyient ’s Q2 was in line with estimates. Sustainability, however, declined a steep 6.4% sequentially (-2.2% y/y) in CC. The $156.8m TCV was down 14.7% y/y, with book-to-bill of 0.9x vs the last four quarters’ average 1.2x, sufficient to meet the muted FY25 guidance. The Q2 EBIT margin was 74bp higher q/q (but y/y down233bps) to 14.2%, despite wage hikes. Management re-iterated its optimism of growth in H2 being better than in H1. Given the inline Q2, we retain our FY25e/FY26e but raise FY25 earnings by 6.6% largely due to higher forex gain.

Outlook

We roll forward our valuation to FY27 and raise our TPtoRs.2,230 (from Rs.1,990), valuing DETat26xFY27e EPS. Hence, we upgrade to Buy.

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Cyient - 30102024 - anand