Motilal Oswal has given Buy recommendation for Cyient recommended buy rating on the stock with a target price of Rs 1000 in its research with a target price of Rs. 1000 in its research report issued on Apr 22, 2022
Motilal Oswal’s research report on Cyient
Revenue fell 0.4% QoQ in USD CC terms in 4QFY22, but was above our estimate of -1.1% QoQ USD CC. The beat was led by both Services (+1.6% QoQ USD CC) and DLM (-9.3% QoQ USD). Growth in Services was driven by Portfolio (10% QoQ), Aerospace (3.9%), and Communications (3.5%), while growth in Rail Transportation (-9.5%) was weak. EBIT margin rose 60bp QoQ to 14.5% in 4QFY22 (200bp above our estimate), led by tailwinds such as offshoring, pyramid rationalization, higher quality revenue, utilization, and SG&A leverage. The same was offset by headwinds such as higher-than-average wage hikes and investments. It guided at an EBIT margin of 13-14% in FY23. The management guided at a revenue growth of 13-15% in FY23. The DLM business continues to suffer from supply-side challenges and is expected to grow in the high single-digits in FY23. The Rail business remains sluggish and has back-ended the recovery in FY23.
We maintain our Buy rating on attractive valuations. Our target multiple of 17x FY24E EPS implies a TP of INR1,000/share, implying an upside of 20%.