Buy Cyient; target of Rs 1730: Motilal Oswal

Motilal Oswal is bullish on Cyient recommended buy rating on the stock with a target price of Rs 1730 in its research report dated July 26, 2023.

Broker Research

July 28, 2023 / 19:04 IST

Buy

26 Aug, 2025 12:21

Volume

Todays L/H

Motilal Oswal's research report on Cyient

CYL reported 1QFY24 Service business (reclassified as DET) revenue growth of 0.3% QoQ in CC. Excluding the business shifted from DLM, it declined 0.2% QoQ CC, marginally below our estimate of 0.3% QoQ CC. 1Q growth was led by the Sustainability vertical (up 4.5% QoQ CC), followed by Transportation (3.2% QoQ CC). Growth was weak in Connectivity (down 2.4% QoQ CC) and New Growth Areas (-6.5% QoQ CC). Normalized EBIT margin for the DET business came in at 16.1%, 60bp above our estimates, mainly led by the cost rationalization measures and efficiency gain in 1Q despite the impact from an adverse business mix during the quarter. Service order intake was modest at USD193.2m, down 12.2% QoQ/up 32.5% YoY in 1Q. However, the deal pipeline remained strong, with six large deals signed in 1Q. CYL has reiterated its confidence of delivering Service FY24 revenue growth of 15-20% YoY CC, but has increased DET EBIT margin growth forecast to 150-250bp YoY.

Outlook

Given the margin beat in 1Q, we raise our FY24/FY25 Consol PAT estimates by 1%/5% respectively. We maintain our Buy rating on the stock on attractive valuations. Our SOTP based target of INR1,730, implies a potential upside of 18%.

For all recommendations report, click here