Cyient snaps 4-day losing streak, surges 7% as CS initiates coverage

NEW DELHI: Snapping a four-day losing streak, shares of IT firm Cyient jumped nearly 7 per cent in Wednesday’s trade after foreign brokerage Credit Suisse initiated coverage on the stock with ‘Outperform’ rating.

The brokerage has a target of Rs 625 on the stock, which at Tuesday’s closing price suggests an upside potential of 32 per cent.

In a note to clients, Credit Suisse has that the IT firm has high exposure to engineering services and niche communications and utilities verticals.

The IT firm is relatively immune to structural challenges in IT industry as its H-1B/L-1 visa dependence is less than 15 per cent, possibly least among its Indian peers, the brokerage said.

Following the development, the stock rose 6.57 per cent to hit a high of Rs 501.75 on BSE.

“With solid momentum, we expect Cyient to report over 13 per cent revenue CAGR over FY17-19. Margins have scope to expand from current 13.6% to 14.6 per cent by FY19. Expect over 15 per cent EPS CAGR over FY17-19, which can drive multiple re-rating,” the brokerage said.

Adverse currency moves, client specific issues, acquisition indigestion are key risks, it said.