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Cyient Ltd: A Muted End to the Year - Views on News from Equitymaster
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Cyient Ltd: A Muted End to the Year
Apr 23, 2016

Cyient Ltd has announced its fourth quarter and full year results for FY16. The company's sales increased by 4.4% QoQ. The net profit decreased by 23.9% QoQ for the quarter.

Performance summary
  • Consolidated net sales increased by 4.4% QoQ in 4QFY16. In US dollar terms, the topline was up 2.1% QoQ. In constant currency terms, the topline was up 2.6% QoQ.
  • The operating performance remained under pressure. The operating margin in 4QFY16 came in at 12.5% compared to 14% in 3QFY16. The operating profit decreased by 7.1% QoQ.
  • Depreciation charges were up 33.2% QoQ. Other income was up 3.8% QoQ. Finance costs were up 51.5% QoQ.
  • The company recorded an exceptional expense of Rs 87.1 million as a one-off bonus payment arising due to the amendment to the Payment of Bonus Act, 1965.
  • The net profit was down by 23.9% QoQ while the net margin fell sequentially to 8.1%.
  • The company had declared an interim dividend of Rs 4 per share during 4QFY16. Therefore, the board did not recommend a final dividend. The total dividend for FY16 is Rs 7. The company has adhered to its 30% payout policy.

    Consolidated financial snapshot
    (Rs m) 3QFY16 4QFY16 Change FY15 FY16 Change
    Sales 7,818 8,158 4.4% 27,359 30,956 13.1%
    Operating expenditure 6,723 7,140 6.2% 23,351 26,748 14.5%
    Operating profit (EBDITA) 1,095 1,018 -7.1% 4,008 4,208 5.0%
    Operating profit margin (%) 14.0% 12.5% 14.7% 13.6%
    Finance costs 32 49 51.5% 58 179 210.4%
    Other income 249 258 3.8% 1,218 1,085 -10.9%
    Depreciation 222 295 33.2% 713 893 25.3%
    Exceptional item 0 -87 0 -87
    Profit before tax 1,090 845 -22.5% 4,455 4,134 -7.2%
    Tax 227 190 -16.3% 1,096 986 -10.1%
    Associate profit & minority interest 6 6 7.3% 173 115 -33.7%
    Profit after tax/(loss) 868 661 -23.9% 3,532 3,263 -7.6%
    Net profit margin (%) 11.1% 8.1% 12.9% 10.5%
    No. of shares (m) 112.5
    Diluted earnings per share (Rs)* 29.0
    P/E ratio (x)* 15.7

    * On a trailing 12-months basis

  • What has driven performance in 4QFY16?
    • The performance across verticals was not broad-based. The data network operation division did not do well on a sequential basis due to the poor performance of the telecom and utilities segments. The Aerospace segment continues to report good numbers.

      Revenue break-up (IT services)
      Verticals 3QFY16 4QFY16 Change
      Aerospace & defense 2,947 3,174 7.7%
      Transportation 797 816 2.3%
      Off-highway equipment 375 367 -2.2%
      Semiconductor 336 359 6.8%
      Medical & consumer electronics 117 139 18.3%
      Utilities 688 620 -9.9%
      Telecom 1,517 1,436 -5.3%
      Energy & natural resources 469 473 0.9%
      Geospatial 539 751 39.1%
      Others 31 24 -21.7%
      Service lines
      Engineering Services 4,894 5,181 5.9%
      Data Network Operations (DNO) 2,893 2,953 2.1%
      Others 31 24 -21.7%
      Geography
      US 4,972 4,911 -1.2%
      Europe, Middle East, Africa (EMEA) 1,814 2,080 14.7%
      ROW 1,032 1,167 13.1%
    • The operational performance for the quarter was under the weather, largely due to challenges in receiving license sales for Softential's service management business. This is expected to reverse in FY17.
    • The bottomline was lower by 23.9% QoQ while the net margin fell to 8.1% in 4QFY16.
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