ICICI Direct recommended hold rating on Cyient with a target price of Rs 620 in its research report dated April 26, 2019
ICICI Direct's research report on Cyient
Cyient reported flat US$ revenues in Q4FY19 mainly led by a decline in design led manufacturing (DLM) business partly offset by growth in services revenues. Q4FY19 services revenue growth was, to a certain extent, curtailed by issues in large clients in aerospace & defence (A&D) segment and communication segment. Cyient expects these issues to continue in Q1FY20E. Growth could pick up from Q2FY20E. Margin expansion in services business and cost efficiency in DLM led to an overall rise in EBITDA margins.
Hence, we expect a re-rating post Q2FY20E. As a result, we downgrade the stock to HOLD from BUY and downgrade the multiple to 12x on FY21E EPS leading to revised target price of Rs 620/share.
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