Cyient pares some gains after hitting 52-week high in early trade

Shares of Cyient, the mid-tier IT company, hit a 52-week high of Rs 1,194.10 apiece on the BSE in the morning trade on April 21 after it reported encouraging March quarter results. The Hyderabad-headquartered firm posted a net profit of Rs 176 crore for the fourth quarter of the fiscal year 2022-23, up 8.1 per cent QoQ and 14.1 per cent YoY. The group's revenue rose 48.3 per cent YoY and 8.2 per cent QoQ to Rs 1,751.4 crore, as per the company's release. 

Further, the group's revenue growth in constant currency terms stood at 6.6 per cent QoQ and 39.1 per cent YoY and its consolidated Services segment revenue stood at Rs 1,448.9 crore, with QoQ growth of 5 per cent and YoY growth of 47.3 per cent.

Meanwhile, the company's board has recommended a final dividend of Rs 16 per equity share, on a par value of Rs 5 apiece, for FY23. In addition to it, the group's EBIT came in at Rs 249.4 crore, with a margin of 14.2 per cent, the company said. Its Core Services order Intake grew by 13.3 per cent YoY and offshoring for Core Services at 53.4 per cent.

Karthikeyan Natarajan, Executive Director, and CEO, of Cyient, said, "As we get into the new financial year, we will focus on partnering with our customers to design Digital and Connected Enterprises, Sustainable Industries, and an Autonomous World. We continue to enable the technology-led transformation that will help our customers solve problems that matter. And to do this, we are determined to invest in upskilling our associates. The  recognition of 'Great Place to Work' in India is further evidence of our commitment to  building an inclusive and equitable workplace."

The company’s design-manufacturing business Cyient DLM, which filed for listing earlier this year, reported an over-53 per cent increase in revenue.

Commenting on the results, Krishna Bodanapu, Executive Vice Chairman & Managing Director, Cyient, said, " This quarter, we won five large deals worth over $185 million and saw a 38.4 per cent CC YoY growth in Consolidated Services Revenue. We also completed three strategic acquisitions to extend our service offerings portfolio and enter newer markets. I thank our dedicated associates, trusted partners, and customers for enabling us to have a successful FY23."

What analysts say

IDBI Capital

Cyient reported strong organic growth in services revenues in Q4FY23 led by the transport vertical. Going forward, the company has guided services revenue growth of 15-20 per cent and 100-200 bps improvement in margins. We have conservatively built-in revenue growth of 17 per cent due to macro uncertainty and possible delay in revenue conversion. The growth in revenues is expected to be driven by strong double-digit growth in aerospace, communication and inorganic contribution. Further, we have taken the lower end of margin expansion of ~100 bps improvement in services margins. Despite this conservative assumption, our EPS has been upgraded by 5% in FY25E. Hence, we maintain a BUY rating on the stock with a revised target price of Rs 1,265 (17x FY25E EPS).