Buy Cyient, target price Rs 1250: Anand Rathi

Anand Rathi has buy call on Cyient with a target price of Rs 1250. The current market price of Cyient Ltd. is Rs 892.7.
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 9844.17 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
Cyient’s Services at $131m (up 1.2% q/q, 9% y/y) had its ups and downs in the year but grew 9.2% in FY22. The company is now aiming at 15% growth in FY23, catching up with peers like LTTS (guided to 15.5%). Services order intake was $188m, taking TTM to $632m, up 14% y/y. DLM at $26m (down 14% y/y) continues to face challenges, expected to grow <10% in FY23 (FY22: 9%). The 14.5% EBIT margin was up 59bps q/q, 180bps y/y, with attrition softening a bit to 27%. No meaningful change in estimates but the brokerage revises target to Rs1,250 (from Rs1,460), at 21x FY24e EPS, a discount to peers reflecting patchy growth.

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.