- 25 Oct 2024
- ICICI Securities
MODEST RECOVERY; DECLINE IN TCV FOR THE SECOND CONSECUTIVE QUARTER; HIGH ASKING RATE FOR H2
News: Cyient at group level reported revenue of US$ 220.7 mn, up 9.9% QoQ & 2.7% YoY (up 2.6% YoY in CC terms). In DET business reported revenue of US$ 173 mn, up 2% QoQ/ down 3% YoY (up 1.3% QoQ /down 3.3% YoY in CC terms). Geography wise APAC (21.6% of the mix) was up 9.6% QoQ, followed by North America (48.3% of the mix), was up 4.8% QoQ, while Europe (30.1% of the mix) declined by 6.4% QoQ. Segment wise in CC terms contrary to the previous quarter, all business units saw an uptick barring sustainability with Transportation, Connectivity and New Growth reporting a growth of 3.4%, 3.9%, 9.7% respectively. While, sustainability declined by 6.4%, given the seasonability. The company in DET business reported EBIT margin of 14.2% (up ~70 bps QoQ) while at Group level EBIT margin came at 12.5% (up 60 bps QoQ). The PAT stood at ₹1,766 crore with a PAT margin of 12.2% (up ~220 bps QoQ) in DET business, aided by forex gains. The company in Q1 reported order intake of US$ 156.80 mn, down 14.2% QoQ & 14.7% YoY. The company declared a dividend of ₹12 per share.
Views: Notably, the order intake for the quarter declined consecutively for the second time by 14.7% YoY. Management stated that they expect H2 to be better than H1 on the back of improved performance in the sustainability segment and ramp up of the deals signed in Q2. It further stated that semiconductor is an important segment for them moving forward, as it has recently set up its wholly owned subsidiary semiconductor private limited to drive dedicated focus on its chip designing and sales. The management’s aspirations of exiting at 16% EBIT margin and maintaining flattish revenues for the year (implying ~5% CQGR in H2), remains a tall ask given the weak order inflows and key factor of execution thereafter.
Impact: Neutral