Cyient shares rise 3% after analysts meet; check latest commentary and target price

Shares of Cyient Ltd surged about 3 per cent during the trading session on Monday after the company hosted its investor meet on Friday, December 8, 2023 at its Manikonda facility in Hyderabad. A number of brokerage firms and analysts have attended the event and have shared their views on it, which are mostly positive.

Cyient provided insights on its business strategy and medium-term business outlook at its analyst meet, said analysts attending it. The management reiterated its guidance of achieving revenue growth and margins within the projected range, they said. However, brokerages are mostly positive to the stock.

Shares of Cyient rose about 3 per cent to Rs 2007.90 on Monday, commanding a total market capitalization of more than Rs 22,000 crore. The scrip had settled at Rs 1,950.70 in the previous trading session on Friday. The stock is up more than 160 per cent from its 52-week low at Rs 765.05 hit on December 24, 2023.

Cyient's strategy is based on a balanced portfolio of verticals, better alignment of incentives, enhancing capabilities in high growth services and scalable & agile delivery. More of the same and continued execution rigor to drive sustainable growth and improved profitability, said Kotak Institutional Equities.

"We expect 10 per cent organic revenue CAGR over FY2023-26E and EBIT margin in the range of 16-17 per cent over the period for the DET segment. We revise our Fair Value to Rs 2,200, based on 21 times multiple and roll forward to December 2025," it added with retaining a 'buy' with a fair value target of Rs 2,200.

Management believes that it has achieved the right portfolio or business mix to sustain strong performance. Its investments in fueling the sales engine and building strategic capabilities, coupled with a favorable upswing in industrial demand, have bolstered growth across BUs, said Motilal Oswal Financial Services.

"Majority of its growth vectors are performing well, which should help the company navigate any weakness in its communications vertical. The company aspires to achieve 18 per cent EBIT margin (DET business) in the medium-term, while 20 per cent EBIT margin remains a long-term aspiration," it added with a 'buy' tag and a target price of Rs 2,250.

Cyient management's optimism is predicated on uptrend in Aerospace (MRO, ER&D), semi-con led automotive (SDV) and Energy sector. Cyient’s pro-active portfolio diversification lends predictability to its future growth while also allowing it to bet on areas with right to win, said the brokerages.

Going ahead, Cyient wants to focus on being more customer-centric, increasing sales rigor, improving large deals engine, and doubling down on key accounts. However, management noted that some course correction is still required to mitigate cyclicality and perform on a consistent basis, said Antique Stock Broking.

On the back of an improved medium-term outlook, we now value the stock on a forward PE multiple of 20 times on 1HFY26E EPS, still at a 20 per cent discount to LTTS' PE multiple. We maintain a 'hold' rating with a revised target price of Rs 1,750," it said.

Management highlighted a growth strategy built on three vectors- growing a balanced portfolio; delivering intelligent engineering and tech solutions; and driving exponential expansion through M&A and investments, said Nuvama Institutional Equities. "They continue to expect strong profitable growth, and maintain the FY24 guidance for revenue growth and margin expansion," it said.

"We view Cyient management taking the right steps to take the company onto a path of sustainable profitable growth. We would, however, wait to see more evidence of its sustainability in numbers. The sharp run-up in stock leaves limited upside potential," it said while retaining hold in the stock with an unchanged target price of Rs 1,920.

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