Reduce Cyient; target of Rs 1700: Emkay Global Financial

Emkay Global Financial recommended reduce rating on Cyient with a target price of Rs 1700 in its research report dated January 24, 2025.

Broker Research

January 24, 2025 / 12:24 IST

Reduce

26 Aug, 2025 12:21

Volume

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Emkay Global Financial's research report on Cyient

Cyient posted inline revenue performance in DET in Q3, while EBITM missed estimates. DET revenue grew 1.3% QoQ (2.4% CC) to USD175.2mn. DET EBITM declined by 70bps QoQ to 13.5%, coming in below our estimate. Revenue growth was driven by Aerospace, Connectivity, and New Growth Areas, while Sustainability declined for the 3 rd consecutive quarter. Order intake rebounded in Q3 on QoQ basis/up 5% YoY, albeit down 3% YoY in 9M. The mgmt cut FY25 revenue guidance to -2.7% CC (earlier flattish), implying muted growth in Q4. It also guided to ~13.5% EBITM in Q4FY25 due to right shifting of revenue trajectory during the year (earlier guided to ~16% EBITM by Q4). Cyient has announced the resignation of Karthikeyan Natarajan as ED and CEO, effective immediately. We cut FY25-27E EPS by 10%-12%, given the Q3 performance and guidance. Valuation is not demanding, but weak execution, softness in near-term outlook, and abrupt CEO exit would weigh on stock performance.

Outlook

We downgrade the stock to REDUCE, cutting TP by ~26% to Rs1,700, valuing the DET business at 20x Dec-26E and the DLM business at 20% discount to its CMP.

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