Cyient Q1 Results Review - Weak Numbers; Right Shifting Of Projects: IDBI Capital

IDBI Capital Report

Cyient Ltd. reported weak (-10.3% QoQ) revenues in Q1 FY25 due to ramp-up delays (in connectivity and sustainability vertical and softness in rail segment) and right shifting of projects. The company expects H2 FY25E to be better than H1 FY25E on the back of strong order book (order book backlog) & deal ramp ups.

Management expects order book to show double digit growth compared to FY24. Hence, the company has guided high single digit growth for IT services and Ebit margin in range of 16% (seems to be optimistic considering wage hikes and furloughs quarter coming up) by end of FY25E.

We believe, the guidance is based on optimism of H2 FY25E and hence conservatively built 4% YoY growth for FY25E. Also, management expects DET revenue growth to be flattish YoY in CC terms.

Following the weakness in this quarter, we have revised target price downwards from Rs 2,210 to Rs 1,936 (22 times FY26E EPS). We downgrade our rating to Hold due to weakness in Q1.

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