Prabhudas Lilladher has given Buy recommendation for Cyient with a target price of Rs. 1208 in its research report issued on Apr 26, 2022

Prabhudas Lilladher’s research report on Cyient

Cyient’s acquisition of Citec for Euro 94 mn (~$101 mn) at a valuation of 1.2x EV/Sales can help accelerate long term growth prospects. It can 1) add scale (14% of Cyient’s FY22 revenue), 2) diversify Cyient’s presence in plant engineering (currently only ~2% of Cyient’s revenue, will increase to ~11% of combined entities revenue), 3) expand footprint in Nordic region, 4) provide complimentary set of clients with cross-selling opportunities and 5) establish delivery presence in Mumbai and Pune with increased scope for offshoring. Though medium term growth opportunities for Citec remain strong we need to closely monitor how integration and cross-selling pan out for Cyient, since it is one of the largest acquisitions in ER&D space in India. We increase our EPS estimates by 5.6%/10.2% led by increase in revenue estimates by 13%/12% and partially offset by cut in margin estimates by ~60bps/20bps for FY23/24.


We continue to value Cyient on earnings multiple of 18x FY24 EPS of Rs.67 to arrive at TP of 1208 (earlier Rs. 1096). Cyient is currently trading at attractive valuations of 15.8x/13.4x on FY23/24 earnings of INR 57/67 respectively at significant discount to ER&D sector trading at ~40x FY24 EPS. We anticipate 21% revenue CAGR & 20% EPS CAGR for FY22-24E. Maintain BUY.

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