Cyient shares tank 7%; Q3 net profit tanks 17% sequentially

Cyient shares fell 7.2 percent in early trade on January 29. The IT solutions provider registered a 17.4 percent sequential decline in consolidated profit at Rs 147.2 crore for the third quarter of FY24, impacted by tepid topline growth and a higher exceptional loss.

Revenue from operations for the quarter grew by 2.4 percent to Rs 1,821.4 crore compared to the previous year.

As of 9.20 am, Cyient shares were quoting Rs 1,950.3 on the NSE, lower by 3.2 percent. On January 25, shares of Cyient settled at Rs 2,020.7, lower by 1.13 percent compared to the previous session’s closing price on the NSE.

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However, despite the fall in earnings, brokerages maintained their positive outlook on the company. Morgan Stanley said that the margin guidance implies a stable-to-better Q4, with demand visibility seen in the key verticals of aerospace and connectivity. The brokerage maintained its ‘overweight’ call, with a target price of Rs 2,700 apiece.

HSBC added that the revenue growth was broadly in-line with the consensus expectations. The communications vertical bottoming out was a positive, according to the bank. The lender has a buy rating on the counter, with a price target of Rs 2,545 per share.

Motilal Oswal noted that while the topline guidance slipping was disappointing, it was on expected lines given the tough macro environment. This was also indicated by the management, especially the adverse impact on decision-making, and execution cycles.

“The company also expects its FY25 growth to be backended, with expectation of a macro recovery to aid growth. Considering the investments in restructuring and cost rationalization initiatives, management was confident of delivering sustainable double-digit growth even over the long term,” added Motilal Oswal, in a note.

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