Cyient (CYL IN) - Strong performance; maintain outperformer - CSEC Research

Strong performance; maintain outperformer

- In 4QFY17, Cyient reported 3.8% QoQ revenue growth with 3.6% QoQ cc growth in a seasonally weak quarter as core business and DLM (design led manufacturing) grew 3.2% QoQ and 8.7% QoQ, respectively. Core business revenue growth was led by semiconductors (up 10.7% QoQ) and utilities & geospatial (up 10.8% QoQ). In Rupee terms, revenues were INR 9.4 bn, (+2.6% QoQ). Services business grew 3.3% QoQ, including USD 0.8 mn in revenue from recently acquired Certon. Rangsons grew by 8% QoQ to USD 16 mn.

- EBITDA margin during the quarter declined marginally by 10 bps QoQ to 13.3%, while margins in the Services business expanded by 20 bps QoQ. Management has guided EBITDA margins to expand by 50bps in FY18E, led by improvement in operational efficiencies, and stable profitability in Rangsons. Adjusted PAT was INR 1bn (+11.0% QoQ). The quarter included an exceptional item of INR 261mn, which relates to the impact of additional costs led by its RSU program.

Valuation: We believe that Cyient to continue leading industry growth, as the company would be benefited by opportunities in the Engineering and Defense segments. At CMP, the stock trades at 14.3x/12.5x of FY18/19E EPS. We assign a target P/E of 14X FY19E EPS and value the stock at INR 606. We maintain an OUTPERFORMER rating on the stock. Risks: Unfavorable cross currency movement & further delay in deal closures.

Shares of Cyient LTD. was last trading in BSE at Rs.515 as compared to the previous close of Rs. 526.75. The total number of shares traded during the day was 6756 in over 508 trades.

The stock hit an intraday high of Rs. 528 and intraday low of 505.75. The net turnover during the day was Rs. 3464851.

Source : Equity Bulls

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