X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2018 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Cyient Ltd: Good performance maintained - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

The India Letter
  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

Cyient Ltd: Good performance maintained
Jan 15, 2015

Cyient Ltd has announced its third quarter results for 2014-2015. The company's net sales have increased by 5.9% QoQ. The net profit has increased by 11.8% QoQ for the quarter.

Performance summary
  • Consolidated net sales increased by 5.9% on a QoQ basis during the third quarter of financial year 2014-2015 (3QFY15). In US dollar terms the topline was up 3.5% QoQ.
  • The operating performance saw an improvement due to slower growth in employee costs compared to the sales growth. The operating margin in 3QFY15 improved by 0.2% QoQ and stood at 16.3%. The operating profit increased by 7.1% QoQ.
  • Other income came in higher by 7.5% QoQ. This was due to forex gains as well as high treasury income from the company's cash balance which now stands at a record high of Rs 8 bn.
  • Depreciation was lower by 3.9% QoQ. The sequential fall in depreciation along with the strong operating performance and higher other income led to a growth in the profit before tax (PBT) by 8.8% QoQ.
  • The net profit was up by 11.8% QoQ, largely due to the strong operating performance.

Consolidated Financial snapshot
(Rs m) 2QFY15 3QFY15 Change 9MFY14 9MFY15 Change
Sales 6,724 7,118 5.9% 16,116 20,059 24.5%
Operating expenditure 5,643 5,961 5.6% 13,095 16,953 29.5%
Operating profit (EBDITA) 1,081 1,157 7.1% 3,021 3,106 2.8%
Operating profit margin (%) 16.1% 16.3%   18.7% 15.5%  
Finance costs 12 14 15.8% 8 29 273.1%
Other income 340 366 7.5% 199 840 321.9%
Depreciation 181 174 -3.9% 546 527 -3.5%
Profit before tax 1,228 1,336 8.8% 2,666 3,389 27.1%
Tax 364 373 2.7% 816 924 13.2%
Associate profit & minority interest 37 46 23.1% 112 130 16.1%
Profit after tax/(loss) 902 1,008 11.8% 1,962 2,595 32.3%
Net profit margin (%) 13.4% 14.2%   12.2% 12.9%  
No. of shares (m)         112.1  
Diluted earnings per share (Rs)*         29.4  
P/E ratio (x)*         19.7  
*On a trailing 12 months basis

What has driven the performance in 3QFY15?
  • Cyient witnessed growth across most verticals with Utilities and Communications leading the way. Aerospace and Defense was soft in this quarter as was the Off-highway segment. The engineering division was weak due to the seasonality of the December quarter for Indian IT firms. However, the data network operations division witnessed high growth.

    Segment-wise performance
    Verticals 2QFY15 3QFY15 Change
    Aerospace & defense 2,239 2,221 -0.8%
    Transportation 699 719 2.8%
    Off-highway equipment 343 320 -6.6%
    Semiconductor 410 420 2.4%
    Medical & consumer electronics 87 85 -2.3%
    Utilities 733 861 17.5%
    Telecom 1,035 1,303 25.8%
    Energy & natural resources 477 491 2.9%
    Geospatial 632 626 -0.9%
    Others 67 64 -4.7%
    Service lines
    Engineering services 4,088 4,093 0.1%
    Data network operations (DNO) 2,575 2,961 15.0%
    Others 61 64 5.9%
    Geography
    US 4,297 4,627 7.7%
    Europe, Middle East, Africa (EMEA) 1,842 1,908 3.5%
    ROW 585 584 -0.2%

  • The operational performance of the company continues to improve. The management stated that margin expansion will continue in the near future with improving productivity.

  • The bottomline will continue to benefit from the treasury income that the company earns on its cash balance. This will be an added positive for profitability going forward.
What to expect?
At the current price of Rs 580 the stock of Cyient trades at 19.7 times its trailing twelve months (TTM) earnings.

The company continues on the path of solid growth. There is enough revenue visibility for the near term and the company continues to win decent sized deals. Cyient added 23 clients in the quarter: 8 in engineering and 15 in DNO.

The company has completed the integration of its recent acquisitions Softential and Invati. The management stated that there are many opportunities for cross selling which will help revenue growth in FY16. Cyient has recently acquired Rangsons Electronics. We have presented our view on the same. The company is in the process of evaluating 6 more potential targets.

The margin outlook continues to remain strong. Improving employee utillisation (which stood at 75.8% in the quarter), higher treasury income as well as a falling tax rate, bodes well for margins in the long term.

The fundamentals of Cyient are strong. At the time of recommendation, we had asked investors to invest 50% of the sum that they were intending to put into the stock and invest the remaining once the stock corrects by around 20%. For investors who do not have the stock in their portfolio, we re-iterate that view at current levels as well. However, for all the investors who have brought the stock already, we recommend that they do not buy any more at these levels. They may invest more upon a price correction of about 20-25% from current levels.

To Read the Full Story, Subscribe or Sign In



DISCLOSURES UNDER SEBI (RESEARCH ANALYSTS) REGULATIONS, 2014
INTRODUCTION:
Equitymaster Agora Research Private Limited (hereinafter referred to as "Equitymaster"/"Company") was incorporated on October 25, 2007. Equitymaster is a joint venture between Quantum Information Services Private Limited (QIS) and Agora group.
BUSINESS ACTIVITY:
An independent research initiative, Equitymaster is committed to providing honest and unbiased views, opinions and recommendations on various investment opportunities across asset classes.
DISCIPLINARY HISTORY:
There are no outstanding litigations against the Company, it subsidiaries and its Directors.
GENERAL TERMS AND CONDITIONS FOR RESEARCH REPORT:
For the terms and conditions for research reports click here.
DETAILS OF ASSOCIATES:
  1. Quantum Information Services Private Limited (QIS) having its registered office at 103, Regent Chambers, Nariman Point, Mumbai 400021 is registered under SEBI (Investment Advisers) Regulations, 2013 vide Registration No. INA000000680. QIS provides information on mutual funds and personal financial planning, financial markets in general, and services related to financial planning and research in various financial instruments including mutual funds, insurance and fixed income products to customers. It offers asset allocation and researched investment recommendations through its financial planning services through its website www.personalfn.com
  2. Agora Holdings (Cyprus) Limited having its registered office at Akropolis, 59-61, 3rd Floor, Office 301 Strovolos 2012 Nicosia Cyprus belongs to Agro group (Agora) which owns www.agora-inc.com and is one of the largest and most successful consumer newsletter publishers in the world.
  3. Common Sense Living Private Limited (CSL) owns www.commonsenseliving.co.in and is an initiative that provides straightforward lifestyle and wealth-building ideas from wealth coach Mark Ford. CSL is 100% subsidiary Company of Equitymaster.
DISCLOSURE WITH REGARDS TO OWNERSHIP AND MATERIAL CONFLICTS OF INTEREST:
  1. Neither Equitymaster, it's Associates, Research Analyst or his/her relative have any financial interest in the subject company.
  2. Neither Equitymaster, it's Associates, Research Analyst or his/her relative have actual/beneficial ownership of one percent or more securities of the subject company at the end of the month immediately preceding the date of publication of the research report.
  3. Neither Equitymaster, it's Associates, Research Analyst or his/her relative have any other material conflict of interest at the time of publication of the research report.
DISCLOSURE WITH REGARDS TO RECEIPT OF COMPENSATION:
  1. Neither Equitymaster nor it's Associates have received any compensation from the subject company in the past twelve months.
  2. Neither Equitymaster nor it's Associates have managed or co-managed public offering of securities for the subject company in the past twelve months.
  3. Neither Equitymaster nor it's Associates have received any compensation for investment banking or merchant banking or brokerage services from the subject company in the past twelve months.
  4. Neither Equitymaster nor it's Associates have received any compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company in the past twelve months.
  5. Neither Equitymaster nor it's Associates have received any compensation or other benefits from the subject company or third party in connection with the research report.
GENERAL DISCLOSURES:
  1. The Research Analyst has not served as an officer, director or employee of the subject company.
  2. Equitymaster or the Research Analyst has not been engaged in market making activity for the subject company.
Definitions of Terms Used:
  1. Buy recommendation: This means that the investor could consider buying the concerned stock at current market price keeping in mind the tenure and objective of the recommendation service.
  2. Hold recommendation: This means that the investor could consider holding on to the shares of the company until further update and not buy more of the stock at current market price.
  3. Buy at lower price: This means that the investor should wait for some correction in the market price so that the stock can be bought at more attractive valuations keeping in mind the tenure and the objective of the service.
  4. Sell recommendation: This means that the investor could consider selling the stock at current market price keeping in mind the objective of the recommendation service.
Feedback:
If you have any feedback or query or wish to report a matter, please do not hesitate to write to us.

Small Investments
BIG Returns

Zero To Millions Guide 2019
Get our special report, Zero To Millions
(2019 Edition) Now!
We will never sell or rent your email id.
Please read our Terms

CYIENT LTD SHARE PRICE


Nov 16, 2018 (Close)

TRACK CYIENT LTD

  • Track your investment in CYIENT LTD with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
  • Add To MyStocks

CYIENT LTD - KINGDEE INTER. COMPARISON

COMPARE CYIENT LTD WITH

MARKET STATS