Hold Cyient; target of Rs 300: ICICI Direct

ICICI Direct's research report on Cyient

Larsen & Toubro Infotech’s (LTI) revenues were in line with our estimates while margins were marginally above our estimates. Although the company reported a revenue decline of 4.8% QoQ, it was relatively better than some of the larger peers that reported average 7.0% QoQ decline in revenues in Q1FY21. In addition, EBIT margins improved 70 bps to 17.4% (above our estimate of 16.8%) mainly due to absence of one-off expenses in the quarter, rupee depreciation and cost rationalisation. Further, despite a challenging quarter, the company closed a large deal of US$20 million.

Outlook

However, considering the near-term weakness in aerospace & defence coupled with the recent run up in the stock price, we remain cautious on the stock and maintain our HOLD rating.

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