Cyient - Improved Vertical Outlook; Robust Execution Capabilities: Axis Securities

NDTV Profit’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer NDTV Profit’s subscribers an opportunity to expand their understanding of companies, sectors and the economy..Axis Securities Report.Valuation and recommendationWe recommend a 'Buy' rating on Cyient Ltd. and assign a 22 times price to earning multiple to its FY26E earnings of Rs 99.4/share to arrive at a target price of Rs 2,195/share, implying an upside of 13% from the current market price..Recommendation rationale and key highlights Sustainability vertical: Cyient operates a plant engineering business under its sustainability vertical. The management expects the energy and utilities industry will accelerate demand in this segment. Moreover, the energy transition from fossil fuels to greener and newer energy fuels will drive strong demand in the near term. Cyient has developed robust capabilities to partner with these technological changes with large manufacturers in whole ecosystems. New growth areas: Automotive, semiconductor, hi-tech, healthcare, and medical devices are the new growth areas. The management foresees strong demand in the automotive segment, however, given the entry of many players in the segment, the focus will be on fewer areas like driving growth through silicon and semi-conductor partnerships and developing capabilities around autonomous vehicles. Cyient’s sub-segment exposure to automotive is largely around tier-I suppliers as well as construction and off-highway equipment companies. Communication Vertical likely to remain laggard in the near term: The communication vertical remained the laggard in the past few quarters due to high-interest rates which have pressured leveraged sectors like Telecom. It is curtailing capex and opex on 5G-related spending for being weak in the absence of a clear monetisation path for that technology given it is a business-to-business technology (versus business-to-consumer customer base of telecom companies). The management expects weakness to continue in the near term. .OutlookFrom the long-term perspective, we believe Cyient is a better engineering research and development player with an improved outlook and better deal wins. The recent recovery and momentum are likely to be sustained for the next two to three years. However, rising concern over uncertainties in the large economies and supply-side constraints may pose challenges to the growth prospects of the company..Key risks to our estimates and target priceThe demand environment is uncertain due to the potential threat of recession from the world’s largest economies.The rising subcontracting cost and cross-currency headwinds may impact operating margins negatively..Click on the attachment to read the full report:.Nifty, Sensex Trade Marginally Higher As ITC, Tech Mahindra, ICICI Bank Lead: Midday Market Update.DISCLAIMERThis report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit..Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

Cyient - Improved Vertical Outlook; Robust Execution Capabilities: Axis Securities

Recommendation: With strong growth potential backed by robust deal wins and superior execution capabilities, we maintain our 'Buy' recommendation on the stock.

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