Hold Cyient; target of Rs 550: Centrum

After few quarters of disappointment, Cyient’s delivered a solid positive surprise with 2QFY17 results beating our expectations on all fronts. Core services business grows a whopping 6.6% QoQ which represents the second consecutive quarter of strong growth in services. Steady EBIDTA margin performance and higher other income also helped to PAT beat for the quarter. Cyient retained its commentary of double digit growth in the services business and 50% YoY growth in DLM business. Led by 2Q revenue beat, we raise USD revenue growth assumption to 15.4% for FY17 (vs 12.6% modelled earlier). This factors 13.2% USD revenue growth in core services business (accounts to 90% of total revenues) and 41% growth in DLM (10% of total revenues). Our EPS estimates have been retained as we see scope for margin volatility in the medium term. Our TP is upgraded by 8% to Rs 550/sh (14x FY18E EPS vs 13x FY18E earlier).  Valuations appear fair (13.7x FY18E EPS). Maintain Hold.For all recommendations, click hereDisclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.