Result Update: Cyient Ltd - REDUCE - TP Rs.689 - Kotak

Cyients USD revenue grew by 1.4% QoQ to USD $152mn in 3QFY18 inline with our estimates. Growth was supported by services, which grew by 4.2% QoQ, which was encouraging in a seasonally weak quarter. EBIDTA margins at 14.5% was 40bps ahead of our estimates, which was supported by strong growth. A 23% QoQ decline in Rangsons to USD 12mn was led by an order getting pushed to 4Q. Growth was broad based across verticals and the momentum is expected to continue in 4Q too. Order intake remained strong at USD245mn v/s USD 119mn in previous quarter, this was supported by strong order book from service business. DLM order book softened but management remains confident as the order backlog remains strong. Cyient remains well placed to address opportunities in Engineering and Defense space. Our earnings estimate stand at Rs.37.2, Rs.42.8 and Rs.49.3 for FY18, FY19 and FY 20, respectively. We believe Cyient's performance in FY18 (US$ growth of 13.5% and margin expansion by 50bps yoy) will be better than that of its peers, and execution of its strategy of design plus manufacturing should be reflected in financials from FY19e onwards. We believe consistently meeting its outlook will be key for further rerating. We introduce FY20 estimates and roll forward our valuations on FY20 with a revised target price of Rs.689 (Rs.576 earlier), maintain ACCUMULATE.

Shares of Cyient Limited was last trading in BSE at Rs.642.85 as compared to the previous close of Rs. 643. The total number of shares traded during the day was 38079 in over 1769 trades.

The stock hit an intraday high of Rs. 654.1 and intraday low of 635.45. The net turnover during the day was Rs. 24610654.

Source : Equity Bulls

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