Hold Cyient; target of Rs 760: ICICI Direct
ICICI Direct recommended hold rating on Cyient with a target price of Rs 760 in its research report dated July 13, 2018.
September 18, 2018 / 03:34 PM IST
ICICI Direct's research report on Cyient
US$ revenues declined 2.3% QoQ to $160.8 million and were below our $162.8 million and 1.1% QoQ decline estimate Revenues in rupees grew 1.7% QoQ to Rs 1080.0 crore, below our Rs 1090.6 crore estimate EBITDA margins declined sharply by 190 bps QoQ to 12.2% and were way below our 10 bps decline and 14% estimate. Margin decline was mainly due to lower offshore mix and a decline in utilisation (-120 bps impact) and partial wage hike (-70 bps impact) Reported PAT of Rs 82.5 crore was below our Rs 111.9 crore estimate on account of operating performance being below our expectations and a higher-than-expected tax rate (27.2% as percentage of PBT vs. our estimate of 24%) and lower-than-expected other income.
Cyient reported Q1FY19 numbers wherein the performance was below our expectations on all fronts with a major let down on margins. Although the outlook for the business remains optimistic, an improvement in margin trajectory from hereon has to be watched. Hence, we maintain HOLD recommendation with a target price at Rs 760 (16x FY20E EPS).
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