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Bonanza Portfolio
Cyient (Buy)
CMP: ₹434
Target: ₹636
Cyient (formerly Infotech Enterprises) is an Indian company focused on engineering, networks and operations. It has 12,000+ employees across 38 global locations as of March 2014. The company features among the top 30 outsourcing companies in the world. On 15 January 2010, Daxcon was acquired by Infotech Enterprises America Inc, a wholly owned subsidiary of Infotech Enterprises Ltd, India.
Cyient’s revenue increased to $118.4 million flat q-o-q, up 3.2 per cent y-o-y. Constant currency revenue growth was 0.2 per cent q-o-q/ 6.5 per cent y-o-y. PR and Rangsons revenue were at $10.6 million up 4.9 per cent q-o-q. Growth was impacted due to lower working days which led to lesser onsite capacity by 4 per cent and offshore capacity by 1.5 per cent. Further, growth was also impacted due to cross currency headwinds. In geographical terms North America, EMEA de-grew by 1.2 per cent and 4.2 per cent respectively. Asia Pacific grew by 11.4 per cent q-o-q. Engineering unit de-grew by 0.9 per cent, DNO unit grew by 1.2 per cent q-o-q. We have revised EPS from 44 to 42 since now we expect Rangsons to deliver $50/80 million for FY17E/FY18E. We have a ‘buy’ rating on the stock valuing company 15x based on FY18E EPS of ₹42.
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