Prabhudas Lilladher has given Buy recommendation for Cyient with a target price of Rs. 1293 in its research report issued on Jan 21, 2022

Prabhudas Lilladher’s research report on Cyient

Cyient reported beat in revenue growth of +5.2% QoQ USD (Ple: 4.2%, Cons: 5%) led by higher than expected growth in both Services +3.6% QoQ USD (Ple:3%) and DLM business +12.8% QoQ USD. (Ple: 10%). Revenue guidance of double digit growth in Services remains intact given strong order intake, backlog and deal pipeline (+27% YoY). DLM growth guidance is reduce to low single digit from 15-20% earlier because of order fulfillment challenges due to unavailability or long lead times for semiconductor components. This lost revenue is expected to be realized in future quarters, however it may take 12- 15 months for supplies to normalize.

Outlook

We anticipate 16% revenue CAGR & 19% EPS CAGR for FY22-24E. We continue to value Cyient on 22x to arrive at a TP of INR 1293 (earlier INR 1301) on Sep-23 EPS of INR 58.8. Cyient is currently trading at 17.8/15.6x on FY23/24 earnings of INR 54.9/62.7 respectively. It is trading at significant discount of 60%/78%/68% to LTTS/Tata Elxsi/KPIT on FY23 consensus valuations. Maintain BUY!

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