Cyient hits 52-week low as acquisition disappoints, Q3 net falls

NEW DELHI: IT consulting and software stock Cyient dropped nearly 3 per cent to hit its 52-week low of 455.70 in Friday’s trade after the company’s recent acquisition Rangsons failed to give a desired fillip to its third quarter earnings.

The company on Thursday said its net profit fell 13.86 per cent to Rs 86.84 crore in the December quarter. The IT firm had reported a net profit of Rs 100.82 crore in the corresponding quarter of last year.

At 9.40 am, the stock was ruling at Rs 456, down 2.62 per cent after falling as much as 2.68 per cent in the initial trade.

The company had acquired 74 per cent stake in Rangsons Electronics and its wholly-owned subsidiary Techno Tools Precision Engineering on February 4, 2015.

The management had earlier indicated strong pickup in Rangsons’ revenue in Q3FY16. However, now the management has cut Rangsons’ FY16 revenue estimates to $40mn from $60mn earlier due to delay in execution of orders. The subsidiary reported 4.9 per cent growth in dollar terms.

“Though FY15 was a bad year for Cyient, largely due to specific issues with few clients, we remain confident on long term potential of the company given its exposure to the fast growing engineering segment. Further disappointment in Rangsons, slowdown in aerospace and sustained weakness in energy verticals would be key risks to our thesis,” said Edelweiss Securities in a note.

Meanwhile, Ebitda margin came in at 14.1 per cent for Q3FY16, down 100 basis points from 15.1 per cent in the September quarter. The number was a bit lower than the consensus estimate of 14.7 per cent.