Ms. Aditi Patil, Research Associate at Prabhudas Lilladher
Quick Pointers:
- FY23 revenue growth guidance of 13.5-17.5% YoY CC with high single digit growth in DLM is aggressive.
- Strong expansion in margins in FY22: 13.9%, +390bps YoY
Management provided consolidated revenue guidance of 13-15% YoY CC for FY23 with visibility for a high single digit growth in DLM, due to continued supply side challenges. This implies Services growth of 15.5%-17.5%. We believe that guidance is aggressive in terms of both 1) DLM growth - Semiconductor supply side challenges may persist for a longer period and 2) In Services, growth is not broad-based with Communication and Portfolio (Medical, mining, aerospace) expected to drive growth in FY23 while Rail transportation, Utility and Geospatial expected to pick in H2FY23. Services order intake is healthy at $630.9 mn, +13.7% YoY for FY23. We model 13% YoY USD growth for FY23.
Our EPS estimates remain unchanged. We now value Cyient on 18x (earlier: 22x) given - 1) downside risk to revenue growth because of semiconductor supply challenges in DLM (17% of revenue), 2) Macro uncertainties likely to moderate ER&D spends, and 3) High exposure (~57% of revenue) to aerospace, rail transportation and utilities sectors where growth still remains muted. We arrive at a TP of INR 1096 (earlier INR 1258) on FY24 EPS (roll-over) of INR 60.9. Cyient is currently trading at attractive valuations of 15.4x/13.7x on FY23/24 earnings of INR 54/61 respectively at significant discount to ER&D sector trading at ~40x FY24 EPS. We anticipate 14.3% revenue CAGR & 14% EPS CAGR for FY22-24E. Maintain Buy!
Shares of Cyient Limited was last trading in BSE at Rs. 918.45 as compared to the previous close of Rs. 831.15. The total number of shares traded during the day was 190923 in over 10267 trades.
The stock hit an intraday high of Rs. 952.00 and intraday low of 845.00. The net turnover during the day was Rs. 174470754.00. |
