Neutral Cyient; target of Rs 400 : Motilal Oswal

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26 Aug, 2025 12:21

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Motilal Oswal 's research report on Cyient

Cyient’s 2QFY21 revenue growth was in-line, although recovery was seen in pockets, with Transportation and Communications seeing sharper recovery. On the other hand, continued weakness in Aero & Defense remained a drag on overall performance. Sharper recovery in margins (580bp QoQ) – on the back of operational efficiency in Services and improvement in DLM (design-led manufacturing) – is encouraging. Deal wins (USD127m) have improved sequentially, but continue to be lower v/s last year (-23% YoY). This indicates recovery to pre-COVID levels is still a few quarters away. The growth outlook from 2HFY21 is marginally better than previously expected. In our view, a stock re-rating would require the A&D vertical (30% of revenues) to pass its trough. However, it currently remains under pressure due to the continued negative effect of the COVID pandemic on underlying industries.

Outlook

We upgrade our FY21/FY22E EPS estimates by 6%/8% on a better-than-expected revenue and margin outlook. We await further evidence on execution/margin management before turning constructive on the stock. Maintain Neutral.

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