Cyient Ltd (Cyient) reported a poor set of Q1FY21 numbers. Services revenues declined 15.2% QoQ to US$112.2 million, mainly led by 22.9% QoQ decline in the aerospace & defence segment (36.5% of revenues), 10.8% QoQ decline in communication vertical (23.0% of revenues) and 13.7% QoQ decline in energy & utility verticals (11% of revenues). The services EBIT margin declined 290 bps to 6.7%. Overall consolidated EBIT margin was further lower at 5.2%, mainly led by negative margins in the DLM business. Consolidated PAT was up 8.0% QoQ to Rs. 81.4 crore, mainly due to one-time export incentive income of Rs. 51.9 crore.
Valuation & Outlook
The Q1FY21 performance was subdued. However, we expect revenues & margins to improve QoQ mainly led by increased traction in communication, utility & medical, technology & healthcare. Hence, we revise our revenues and EPS estimates upwards. Accordingly, we revise our target price upwards to Rs. 300/share. However, considering the near-term weakness in aerospace & defence coupled with the recent run up in the stock price, we remain cautious on the stock and maintain our HOLD rating.
For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_Cyient_CoUpdate_Jul20.pdf
Shares of Cyient Limited was last trading in BSE at Rs.294.9 as compared to the previous close of Rs. 284.15. The total number of shares traded during the day was 227981 in over 4893 trades.
The stock hit an intraday high of Rs. 310.5 and intraday low of 290.1. The net turnover during the day was Rs. 68051268.
