Cyient shares surge 8%: Targets by MOFSL, Antique, Choice, Nuvama post Investor Day

Cyient Ltd shares rallied 8 per cent in Wednesday’s trade after a couple of brokerages raised their target prices on the stock following the midcap IT firm’s Investor Day. At the event, the management indicated a significant expansion in Cyient’s addressable market, from $100 billion in traditional ER&D outsourcing to $2.4-3.2 trillion by covering the full engineering lifecycle across nine value-chain stages.

This provided a much larger runway for future growth, Nuvama Institutional Equities said as it upped its target on the stock to Rs 1,050 from Rs 900.  On Wednesday, Cyient share price jumped 7.66 per cent to hit a high of Rs 1,054.60.

Cyient's DET (Digital, Engineering, and Technology) EBIT margin target is set at 15 per cent by FY28 against at 13.2 per cent in Q1. Cyient Semiconductors targets 4 times revenue growth by FY31 with 40 per cent gross margin and 20 per cent-plus EBIT, supported by Kinetic Technologies and increasing traction in its ASSP and ASIC businesses.

"We continue to value the stock using SotP methodology —DET business at 11 times FY28E PE and DLM at current market cap (post 20 per cent holdco discount). We now include semicon business (1x FY28E EV/sales) in our valuation," Nuvama said.

Inexpensive valuations limit downside potential, it said.

Choice Institutional, which attended Cyient's Investor Day, said the Investor Day takeaways strengthened the medium-term growth and earnings-quality thesis, although large-deal conversion and the pace of growth recovery remain key execution watchpoints. It maintained ‘Buy’ rating on Cyient and raise its target to Rs 1,200.

Antique Stock Broking said while the FY27-31 roadmap remained clear, execution is the key monitorable as the company navigates capitalising on the service-oriented stages of the industry lifecycle.

"We continue to maintain our BUY rating with an SOTP-based target of Rs 1,125, reflecting our 11 times 1HFY29E EPS target multiple for Cyient’s DET business," it said.

MOFSL, meanwhile, retained its 'Sell' rating on Cyient as the recovery continued to remain back-ended and expectation for FY27 is a flat organic growth.

"While we are excited about the semiconductor opportunity, we will wait to see some proof of concept before giving a considerable valuation to the business," MOFSL said.

"Based on our SoTP valuation, we continue to value the DET business at 9x FY28E EPS, reflecting gradual margin improvement, a muted organic growth outlook, and continued execution risk," it said while suggesting a target of Rs 740.