Cyient’s earnings revival distant even as new CEO announcement is positive

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Subscribe to enjoy similar stories. The battered Cyient Ltd stock is struggling to regain its footing after weak December quarter (Q3FY25) results, an abrupt CEO resignation, and a sharp cut in FY25 guidance sent shares into a tailspin. On 24 January, the stock had plunged 23% as earnings downgrades poured in and concerns over leadership uncertainty deepened.

To steady the ship, Cyient appointed Sukamal Banerjee as executive director and CEO of its digital, engineering, and technology (DET) business on 19 February for a five-year term. In his last role, Banerjee served as the CEO of a digital engineering firm Xoriant, and prior to that spent 27 years at HCL Technologies. “Cyient is now following in the footsteps of other mid-cap companies, by appointing an experienced leader with strong pedigree to lead its ER&D business," noted a Nuvama Research report.

While Cyient has always had a coveted clientele and strong capabilities, its execution has been patchy, said the Nuvama report, adding that given Banerjee’s experience, it would look to make amends on that. Read this | Attrition costs are catching up with IT companies Despite his credentials, Banerjee faces a tough turnaround task. JP Morgan analysts see his appointment as a positive but point to key challenges that need immediate attention.

First, Cyient must transition from project-based contracts to longer-term annuity deals that provide better revenue visibility. Second, the company needs to revamp its guidance process to prevent repeated earnings misses or hold off on providing guidance until Banerjee has a clearer grasp of the business outlook. Third, “Scale up the Auto ER&D practice via acquisitions as it is a missing piece in the portfolio that we think is likely