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Shares of Cyient Ltd. plummeted by 20% on Friday, January 24, following the company’s disappointing December quarter results
Cyient Shares Fall 20%
Shares of Cyient Ltd. plummeted by 20% on Friday, January 24, following the company’s disappointing December quarter results, released after market hours on Thursday. The decline came after Cyient lowered its revenue growth forecast for a key business segment and revised its EBIT margin expectations downward.
Cyient now anticipates a 2.7% year-on-year revenue decline in constant currency terms for its Digital, Engineering, and Technology (DET) business for FY25, a significant shift from its earlier guidance of flat growth.
The company had previously projected EBIT margins of 16% for Q4 FY25, but now expects them to come in at 13.5%. Additionally, the sudden resignation of CEO Karthikeyan Natarajan, who spent just 20 months in the role, added to investor concerns. He was expected to serve a three-year term, and his abrupt departure has compounded the company’s challenges. Former CEO and Vice Chairman Krishna Bodanapu has taken over interim leadership.
Cyient’s management also revised its FY25 constant currency (CC) revenue guidance to a 2.7% decline, down from its earlier forecast of flat performance. The EBIT margin outlook for Q4 FY25 was similarly reduced from 16% to 13.5%.
What Should Investors Do Now?
JP Morgan downgraded Cyient to a “neutral” rating, slashing its target price to Rs 1,750, suggesting a 17.5% upside from current levels. The downgrade was driven by the unexpected CEO exit and reduced guidance, as well as concerns about the company’s ability to achieve single-digit growth and return to 16% margins by FY26.
Emkay Global also downgraded Cyient to a “reduce” rating, setting a target price of Rs 1,700, reflecting a potential upside of 14%. The brokerage cited weak execution, missed margin estimates, and the leadership change as key factors affecting the stock’s outlook.
Despite the revenue performance aligning with expectations, Cyient faced mixed results across its business segments. While the DET segment showed growth in Aerospace, Connectivity, and New Growth Areas, the Sustainability segment saw its third consecutive quarterly decline. However, the company reported an all-time high order intake of $312.3 million, with 13 large deals contributing $234.5 million in contract value for Q3 FY25.
Cyient’s shares, which had risen 2% on Thursday ahead of the earnings announcement, have dropped 32% over the past year and 24% in the last month.
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