Cyient shares: Everything seems to go down the road for the IT firm's stock trajectory. The shares of the company declined by nearly 20% on the Dalal Street after the company lowered its revenue growth guidance for FY25.
At 10:50 am, the Cyient shares were trading at Rs 1,434 price level, down by over 18.2% on the National Stock Exchange. The recent exit of CEO Karthikeyan Natarajan coupled with a double-digit decline in profit figure has dampened the investor sentiment.
While the company reported a modest revenue growth of 2.4% QoQ (quarter on quarter) in its digital, engineering and technology (DET) segment, margins are expected to remain under pressure in the upcoming quarters.
In the quarter under review, Cyient DLM's Ebitda grew by 23% YoY (year-on-year). However, Ebitda margins declined by 90 basis points, signalling a near-term pressure on profitability. Besides this, the shrinking order book is also a key concern, casting a shadow over the future outlook.
"The order book continued its downward trend, down 19% YoY/6% QoQ in Q3 to Rs 18.5 billion. Order book growth remains a key concern amid a delay in ordering from some clients," Motilal Oswal said in a report.
However, there is a chance that new client acquisitions and potential orders from large customers could improve the future growth outlook.
The conversion of orders from new clients added over the last few quarters and ongoing discussions with some large global potential customers can boost growth visibility, the brokerage firm said.
More turbulence ahead for Cyient
Post the Q3 results, many brokerage houses have revised their target price on the IT stock. The management is already expecting a revenue de-growth of -2.7% YoY (constant currency basis) for FY25E in DET.
Motilal Oswal reduced the earnings estimates for FY26 by 25% owing to softness in order flows, reduced margins and uncertainty around large order flows in the near term.
"We cut our revenue estimate by 2% and EPS estimate by 5% to factor in slower growth and weak margins. We maintain our ADD rating with a target price of Rs 1,790, based on 22x FY27E DET EPS (vs 23x earlier) and adding Rs 163 per share for the Cyient DLM stake," HDFC Securities said in its report.
