Cyient shares decline 9% on weak Q1 results. What should investors do?
Cyient shares plunged 9% to Rs 1724 in Friday's trade after the company posted a drop in June-quarter profit due to delays in project execution.
The company reported a 23.8% sequential drop in its first-quarter net profit at Rs 144 crore. On a year-on-year (YoY) basis, the profit for the Hyderabad-based firm declined 18.6%.
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Unlike the previous quarter when the firm saw deal wins from Airbus and Deutsche Aircraft, the ER&D (engineering and research and development) firm’s revenue was impacted by greater-than-anticipated delays and right shifts in project execution in the connectivity segment. Its Q1 revenue was down 0.6% YoY and 9.9% sequentially at Rs 1,675.7 crore.
The company's DET (Digital, Engineering, and Technology) segment, which accounts for more than 80% of the firm’s revenue, clocked Rs 1,414 crore in revenue, down 5% quarter on quarter (QoQ) and 2.8% YoY.
Revising its annual revenue forecast downward, Cyient said that for FY25, it expects DET revenue growth to be flattish on year in constant currency terms. In April, the ER&D company projected DET revenue to grow in the high single digits for FY25.
Following the Q1 results, global brokerage firm Morgan Stanley downgraded the stock to 'Underweight' from 'Overweight' and cut the target price to Rs 1,550 from Rs 2,250.
Q1 was a miss on all counts and post a sharp miss, the global brokerage firm sees a reset in growth for Cyient but expects risk to the revised
