Cyient shares surge 5% on leadership recast

The share price of Cyient climbed 5 percent on Wednesday following several changes in its top leadership. The company has redesignated Krishna Bodanapu as the executive vice-chairman and managing director, and Karthikeyan Natarajan as the executive director and chief executive officer.

Current President and Global Head of Aerospace, Rail and Communications, Prabhakar Atla, is the CFO-designate and will take over from Ajay Aggarwal on April 20.

The Cyient board had earlier approved the reorganisation of the company into two separate entities. It had filed the draft papers to take the Design Led Manufacturing (Cyient DLM) business public through an IPO. Antony Montalbano had been appointed as the CEO of Cyient DLM. Both Montalbano and Natarajan will report to Krishna Bodanapu.

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Foreign brokerage firm Morgan Stanley believes that the reorganisation and management changes are steps in the right direction for the company. They note that Cyient has improved its gross margins profile in the last two years and that key verticals such as aerospace are coming out of a bad cycle. It has an ‘overweight’ rating on the company, with a target price of Rs 1,100.

In its mid-tier IT coverage universe, Asian market securities, believes Cyient will lead the way with a revenue growth of 5.2 percent QoQ (quarter-on-quarter) in constant currency (CC), led by a strong 25 percent growth in its DLM business.“Cyient, given its high exposure to aerospace vertical, continues to benefit from the recovery in air travel,” it added.

In Q3FY23, Cyient’s consolidated revenue from operations increased 36.7 percent YoY to Rs 1,618.2 crore. Its revenue in the September 2022 quarter stood at Rs 1,396.2 crore. The company’s net profit jumped 97 percent QoQ to Rs 156 crore in Q3FY23, and grew 18 percent on a yearly basis.

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The share price of the company has recorded an increase of 11 percent in the last one year and 30 percent in the last six months.

At 11.20am, the scrip was trading 4.57 percent higher on the NSE at Rs 1,040.15, while the benchmark Nifty IT was up 0.79 percent at 28,860.30 points.

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