Cyient Shares
Cyient Shares, a leading Indian IT company, fell 20% on Friday, January 24, hitting a 17-month low of ₹1,140 per share. The sharp decline came after several brokerage firms lowered their target prices after the company reported weak results for the December quarter.
The fall in the stock was due to factors such as slow growth in its digital, engineering and technology (DET) division, lower revenue forecasts for FY25 and the unexpected resignation of its CEO. These factors put considerable selling pressure on the stock.
Cyient reported a 31.7% drop in net profit for the third quarter of FY25 to ₹122.3 crore compared to ₹179 crore in the previous quarter. However, its revenue from operations grew 4.2% sequentially to ₹1,926.4 crore.
Cyient’s DET division, which makes up over 77% of its total revenue, reported a marginal growth of 2.1% from the previous quarter but a marginal decline of 1.9% year-on-year in constant currency terms. EBIT margin for DET declined by 72 basis points, mainly due to salary hikes and currency-related issues.
Additionally, profit after tax (PAT) for the DET segment fell 30% from the previous quarter and 28% year-on-year to ₹124 crore, falling short of analysts’ expectations.
The company revised its revenue outlook for FY25, now expecting DET revenue to decline by 2.7%, while its previous estimate had predicted no growth. It also lowered its forecast for EBIT margin for FY25 to 13.5% from 16% due to the change in revenue growth.
Despite these challenges, Cyient secured its highest ever order for the DET segment at $312.3 million, a 100% increase from the previous quarter. The company also secured 13 large deals worth $234.5 million.
Further, Cyient CEO Karthikeyan Natarajan resigned with immediate effect, which analysts believe has further increased uncertainty for the company as it faces growth and margin challenges.
Following these developments, domestic brokerage firm Motilal Oswal downgraded the stock to “sell”, citing concerns about weak revenue growth and low margins in FY26E. The firm also cut its earnings estimates for FY25E, FY26E and FY27E by 13%.
Global brokerage firm JPMorgan also downgraded the stock’s rating from “overweight” to “neutral”, lowering its target price to ₹1,750.
It said the CEO resignation and lower revenue growth and margin forecasts make it difficult for Cyient to reach its growth targets for FY26.
Also Read: Cyient Share Price Target
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