Multibagger IT Stock: Up 180% from 52-week low! What's next for Cyient shares?

Shares of Cyient have recovered over 180 per cent from its 52-week low of Rs 803.05, hit on January 6, 2023. The stock hit an intraday high of Rs 2267.55 on January 8, 2024. It has also delivered over 550 per cent return in the last 10 years.

About the company

Cyient is a global digital Engineering and Technology solutions company. The company delivers its services and solutions to a base of over 300 customers, including 29 Fortune 500 companies, across multiple industries. It became a publicly traded organization in March 1997, with the company’s equity shares listed in India, on the National Stock Exchange and the Bombay Stock Exchange.

Where is the stock headed?

According to Avdhut Bagkar, Derivatives & Technical Analyst, StoxBox, the price action is experiencing selling pressure over the hurdle of the 2400 mark. The following move is anticipated once this obstacle is conquered on a decisive note. The support for the weak bias appears at 2100.

"The current trend may see a sideways trend to reassess the strength at the support level. Only a breakdown of 2000 could alter the medium-term outlook. The negative divergence on the “Relative Strength Index” could derail the upward momentum," Bagkar added.

Axis Securities has maintained its 'Buy' recommendation with a target price of Rs 3,000/share. Digital engineering spending is accelerating across industries, with companies rapidly moving from traditional to digital engineering.

It believes that major industries such as Manufacturing, BFSI, Media and Technology, Retail, Healthcare Payers and providers, and Travel and hospitality are developing new products and services to differentiate themselves in their respective industries, thereby creating remarkable opportunities for the company.

It also noted the Aerospace segment is witnessing a sixth consecutive quarter of growth. With air travel increasing, Cyient is well-positioned to capitalize on aerospace digitization and advanced tech for aircraft performance. Growth drivers include higher defence spending, improving manufacturing efficiency, supply chain, and urban air mobility.

"Additionally, the Global demand for aircraft is likely to double in the next 15 years which took 23 years to double last time around. The aerospace industry is poised for a decadal super-cycle, driven by sustainability pressures and a pending platform upgrade, leading to increased ERD spending. On the other hand, the growth in the rail segment would be moderate and it will primarily be a software-driven growth," it said.

IT firms are also set to kick off the December quarter earnings season, with the largest two software exporters Tata Consultancy Services Ltd and Infosys Ltd announcing their results on January 11. According to experts, there is unlikely to be any change in the cautious management commentary. December is already a seasonally weak quarter for IT majors due to higher furloughs, analysts anticipate a likely impact of postponed wage hikes on margins.

"As 3Q furloughs are higher than anticipated at the beginning of FY24, we expect the selective Tier-2 companies (Coforge, Cyient) to revise their revenue guidance downward. Despite this, we expect the companies to maintain and achieve margins within the guided band by implementing rigorous cost-cutting measures," said Motilal Oswal Securities.

Disclaimer: Business Today provides stock market news for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.

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