Buy Cyient, target price Rs 977: ICICI Securities

ICICI Securities has buy call on Cyient Ltd. with a target price of Rs 977. The current market price of Cyient Ltd. is Rs 834.1. 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 9162.41 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
Post the acquisition, the brokerage adds US$15mn/21mn as inorganic contribution from Celfinet resulting in revenue growth of 30.6%/13.4% for FY23E/FY24E. Though Celfinet’s EBIT margin (21.1% for CY21) is higher than that of Cyient (13.9% for FY22) and the acquisition is EPS/EBIT-accretive, it believes increased integration and depreciation costs should result in EBIT margins of 12.8%/13.9% for FY23E/FY24E. The EPS estimates remain largely unchanged. Cyient is currently trading at 15x/12x on FY23E/FY24E EPS of Rs53/65. It continues with BUY rating for Cyient and value the stock at 15x FY24E EPS of Rs65, arriving at a target price of Rs977 (earlier: Rs961).

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.