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ICICI Securities Report
Cyient Ltd. has announced its intent to acquire Citec, a leading plant and product engineering services company in the Nordic region serving customers in energy (gas and renewables) and mining industries, for €94 million (~$101 million).
Citec's revenues of €80 million (~$86.3 million) are equivalent to 14% of Cyient's FY22 revenues. Citec's enterprise value is €94 million (~$101.36 million).
This translates to just 1.2 times of Citec's CY21 revenues and 6.3 times CY21 Ebitda (reported), which is fairly priced in our view.
Debt (~€27 million) on Citec's book will be retired prior to completion of the acquisition and is included in the total cost of €94 million. Cyient has total cash of ~Rs 1.2 billion on its books.
Cyient is heavily concentrated towards aerospace, rail transportation and communication. The acquisition will diversify its presence in energy, industrial and plant engineering, which currently accounts for only ~2% (less than $10 million) of Cyient's revenues and thus reduces cyclicality at overall portfolio level.
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