Buy Cyient, target price Rs 1138: ICICI Securities

ICICI Securities has buy call on Cyient with a target price of Rs 1138. The current market price of Cyient Ltd. is Rs 916.35. Time period given by analyst is one year when Cyient Ltd. price can reach defined target.

Cyient Ltd., incorporated in the year 1991, is a Mid Cap company (having a market cap of Rs 10081.36 Crore) operating in IT Software sector.

Cyient Ltd. key Products/Revenue Segments include Software Development Charges for the year ending 31-Mar-2020.



Financials
For the quarter ended 31-03-2022, the company reported a Consolidated Total Income of Rs 1230.60 Crore, up 2.08 % from last quarter Total Income of Rs 1205.50 Crore and up 8.58 % from last year same quarter Total Income of Rs 1133.40 Crore. Company reported net profit after tax of Rs 154.20 Crore in latest quarter.

Investment Rationale
The brokerage believes valuations are not expensive and the transaction is EPS-accretive from Y1. Overall, the acquisition is accretive on all profitability ratios (including EV/EBIT). Citec has higher EBITDA margin of 19% vs Cyient’s 18.1% as at FY22-end. It builds-in ETR improvement of 50bps (26.5% vs 27% earlier) on the back of benefit accruing from lower taxes in Europe. We revise upward our EPS estimates by ~3%/8% for FY23E/FY24E. It continues with BUY rating for Cyient and value the company at 18x FY24E EPS of Rs63, arriving at a target price of Rs1,138 (earlier: Rs1,037).

Promoter/FII Holdings
Promoters held 23.41 per cent stake in the company as of 31-Mar-2022, while FIIs owned 35.38 per cent, DIIs 21.97 per cent.