Cyient shares tumble 20%, hit 17-month low amid weak Q3 outcomes; analysts decrease goal value

Inventory market as we speak: Shares of Cyient, one in every of India’s main IT corporations, plunged 20% in intraday commerce on Friday, January 24, hitting a 17-month low of ₹1,140 apiece. The sharp decline adopted a number of brokerage corporations trimming their goal value for the inventory after the corporate reported a weak set of numbers for the December quarter.

Components similar to slower progress in its Digital, Engineering, and Know-how (DET) phase, a lower in income steerage for FY25, and the sudden resignation of its CEO led to substantial promoting strain on the inventory in commerce.

The corporate, in its post-market hours submitting on Thursday, reported a 31.7% drop in internet revenue to ₹122.3 crore for Q3FY25, in comparison with ₹179 crore within the earlier July-September quarter. Income from operations rose 4.2% sequentially to ₹1,926.4 crore, up from ₹1,849 crore within the September 2023 quarter.

Revised DET income steerage decrease 

Cyient’s DET phase, which contributes greater than 77% to its whole income, delivered a income of ₹1,480 crore, registering a 2.1% sequential progress however a 1.9% year-on-year (YoY) decline in fixed forex phrases. The EBIT margin for DET stood at 13.5%, reflecting a contraction of 72 foundation factors QoQ, largely attributed to wage will increase and forex headwinds.

The PAT for the DET phase declined 30% quarter-on-quarter (QoQ) and 28% YoY to ₹124 crore, falling wanting analysts’ expectations of ₹156 crore. Additional, the corporate revised its FY25 DET income outlook, now anticipating a de-growth of two.7% YoY in fixed forex phrases, in comparison with the sooner steerage of flat YoY progress.

Moreover, the corporate lowered its FY25 exit EBIT margin forecast to 13.5%, down from its earlier estimate of 16%, citing a shift within the income trajectory throughout the 12 months.

Regardless of these setbacks, Cyient reported its highest-ever order consumption for the DET phase at $312.3 million in Q3FY25, reflecting practically 100% QoQ progress and a 5% YoY enhance. The corporate additionally secured 13 giant offers within the DET enterprise, with a complete contract worth of $234.5 million, as per the corporate’s regulatory submitting.

In the meantime, the corporate introduced that Karthikeyan Natarajan has stepped down as Cyient’s Government Director and Chief Government Officer (CEO) with quick impact. Analysts consider his resignation introduces a interval of uncertainty for the corporate, compounding the already unclear progress and margin outlook for FY26E.

Analysts lower goal value on Cyient inventory

Following the corporate’s December quarter efficiency, home brokerage agency Motilal Oswal downgraded the inventory to “promote,” citing issues over a weak This fall and a seasonally weak H1, which may result in decrease income progress for FY26E and an analogous influence on margins.

The brokerage lower its earnings estimates for FY25E, FY26E, and FY27E by 13%, primarily because of the FY25 steerage downgrade and uncertainties in key progress areas similar to sustainability and aerospace.

The brokerage has a SOTP-based goal value of ₹1,350 apiece. Equally, world brokerage agency JP Morgan downgraded the inventory’s ranking to “impartial” from “chubby” and slashed its goal value to ₹1,750.

The downgrade was pushed by the sudden resignation of CEO Karthikeyan Natarajan, lower than two years into his three-year time period, in addition to the corporate’s diminished FY25 fixed forex income progress steerage of -2.7% (from flat earlier) and a lowered This fall exit EBIT margin steerage of 13.5% from 16%.

JP Morgan highlighted that these developments make it difficult for the corporate to attain excessive single-digit (HSD) progress in FY26 and to get well to 16% margins in FY26.

Disclaimer: The views and suggestions given on this article are these of particular person analysts. These don’t symbolize the views of Mint. We advise traders to verify with licensed specialists earlier than taking any funding selections.