Reduce Cyient; target of Rs 1150: Emkay Global Financial

Emkay Global Financial' research report on Cyient

Cyient logged a steady operating performance in DET, in Q2. DET revenue grew 1.0% QoQ (0.5% CC) to USD164.4mn. DET EBITM expanded by 16bps QoQ to 12.2%. The management focuses on a cost optimization program for negating the impact of investments in sales and wage hikes, and expects margin recovery with revenue acceleration. Given such anchors, Cyient continues to target 15% EBITM by Q4FY27. Semiconductor revenue was up 12% QoQ in Q2 and posted operational loss of USD2.7mn, primarily due to weak revenue and significant investment in sales and R&D to build IP. The burn is expected to stabilize next quarter, with the business projected to reach breakeven in FY27. The mgmt expects H2 to be stronger than H1 on both, the revenue and margin fronts, with margin improvement expected to come with revenue uptick, cost optimization, and absence of one-offs. We cut FY26-28E EPS by 1%-5%, factoring in the Q2 results.

Outlook

We maintain REDUCE on Cyient, with TP of Rs1,150, valuing the DET business at 15x Sep-27E and the DLM business at 20% discount to its CMP.

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Cyient - 17102025 - emkay