The slowdown bug seems to have finally bit mid-cap IT firm, Cyient. The Hyderabad-based 46 billion software specialist in engineering solutions, including product development and life cycle support, process, network & content engineering, reported over 5% decline in Q1FY20 sales. Consolidated year-on-year revenue fell to $156.6 million from $165.2 million. After the result was announced on July 19, the stock has come off 15%, taking the CY19 decline to 24% from 619. It had hit an all-time high of 880 in May 2018.

Post the fall, promoters BVR Mohan Reddy and his son Krishna Bodanapu have bought 35,000 shares each, cumulatively worth 33 million. By doing so, Reddy and Bodanapu have raised their personal holding from 1.25% to 1.29% and 1.68% to 1.72%, respectively. This is the second open market purchase by the promoters in FY20, after Reddy bought 10,000 shares worth 5.5 million on May 16. After the latest purchase, promoter holding stands at 22.82%.

The firm had guided a services revenue growth in high-single-digits and 15% growth in its dlm subsidiary for the fiscal. Investors got jittery when the management cited that it would revisit its growth outlook post Q2 results. Largely exports driven, Cyient earns a chunk of its revenue (49.6%) from the Americas, Europe, Middle East, 22.6% from Africa, and 27.8% from Asia Pacific. In terms of businesses, aerospace & defence (A&D) and transportation verticals contribute 48% of revenue. The bigger worry for analysts has been that business flow from Cyient’s largest A&D customer, utc (which divested its stake in Cyient) has not been encouraging.

Given the weak start to the fiscal, analysts have scaled down revenue estimates for FY20 and FY21 by 7% and 9%, respectively. At the current price of 470, the stock is trading at 12.47x trailing twelve-month earnings. The stock has historically been an institutional favourite, since it was known as Infotech Enterprises. Even in the latest quarter, institutional holding stood at 64.5%, with Amansa Capital being the biggest at 6.76%. As the stock corrected 15% in July, the September holding will present a better picture of which institutions have diluted their holding.