Technology

India I Equities Company Update

Change in Estimates Target Reco 

28 November 2022

Cyient Rating: Buy

Target Price: Rs.1,030
Wider services and Sales investments to improve FY24 growth; Buy
Share Price: Rs.796
To reduce concentration and thus raise expectations of steady organic
revenue growth, Cyient diversified its services portfolio in FY23 via Key data CYL IN / CYIE.BO
acquisitions. It is working toward building a sharper sales organization to 52-week high / low Rs.1,128 / 720
benefit from its wider services. Order intake (in Q2) has yet to improve Sensex / Nifty 62294 / 18513
notably but the large-deal pipeline ($1bn+) reflects early gains. Services 3-m average volume $1.9m
margins are likely to touch 15% with operational rigor (mostly higher Market cap Rs.88bn / $1,077.5m
Shares outstanding 110m
offshore) and capex is likely to be lower, converging to peers, thus raising
FCF. DLM would be an additional value driver, with growth acceleration
ahead, suggested by Q2 orders. TP unchanged at Rs1,030, 15x FY25e EPS.
15% Services growth with 15% EBIT margins to be the yardstick. Cyient
believes its 5x5 (five industry verticals and five service lines) operating model, Shareholding pattern (%) Sep'22 Jun'22 Mar'22
reduced portfolio drags (Rail down 24% y/y as in Q2), brighter outlook in Aero Promoters 23.4 23.4 23.4
(up 8% y/y) and investments in large deals ($530m won in H1, $1bn+ pipeline) - of which, Pledged
should help it grow 15% organically. Besides, it believes it can operate at 15% EBIT Free float 76.6 76.6 76.6
margin with ~3% gains expected in operational efficiency (50% offshore offers - Foreign institutions 32.6 32.7 34.0
- Domestic institutions 23.7 23.9 23.3
opportunity). In Q2, Cyient had 12.5% (adj.) Services margins (15.3% in FY22).
- Public 20.3 20.0 19.2
DLM to be growth driver ahead, closes large deals in Q2. Cyient has not
seen growth in DLM in the last three quarters. However, improvement is likely
as it has signed large orders in Q2. TTM order intake in Q3 FY22 was $150m,
which came down to $104m in Q1. However, in Q2, it rose to $189m, with Q2
intake of $118m. This will accelerate growth to a ~17% FY23-25 CAGR. The Relative price performance
1,200
company has decided to carve out this division to capture better scale-up 1,100
opportunities and sharpen management’s focus on the Services division. DLM’s 1,000
EBITDA margins are likely to be ~11-12%. 900
`
Buy, with unchanged target of Rs.1,030. The stock quotes at 12x FY25e EPS 800
700
of Rs.68, attractive, given expectations of rising organic growth, potential value
600
creation opportunities in the DLM carve out, and after factoring in some risks
Nov-21
Dec-21
Jan-22
Feb-22
Mar-22
Apr-22
May-22
Jun-22
Jul-22
Aug-22
Sep-22
Oct-22
due to the company’s acquisitive nature. Cyient is currently net-debt, which Nov-22
restricts its ability to wade through in a tough environment. Therefore, we value CYL Sensex

the stock at 15x FY25e EPS. Risk: M&A-integration-related. Source: Bloomberg

Key financials (YE Mar) FY21 FY22 FY23e FY24e FY25e

Sales (Rs m) 41,325 45,344 59,216 71,133 79,815
Net profit (Rs m) 3,641 5,219 4,567 6,679 7,447
EPS (Rs) 33.1 47.8 41.6 60.8 67.8
P/E (x) 24.2 16.7 19.2 13.2 11.8
EV / EBITDA (x) 12.7 9.4 7.9 6.5 5.9 Mohit Jain
P/BV (x) 3.0 2.8 2.6 2.3 2.1 Research Analyst
RoE (%) 13.2 17.2 14.1 18.7 18.7
RoCE (%) 9.1 12.5 13.0 15.2 16.0
Dividend yield (%) 2.1 3.0 2.2 3.2 3.5 Krishna Thakker
Net debt / equity (x) -0.4 -0.3 0.1 0.0 -0.0 Research Associate

Source: Company, Anand Rathi Research

Anand Rathi Share and Stock Brokers Limited (hereinafter “ARSSBL”) is a full-service brokerage and equities-research firm and the views expressed therein are solely of
ARSSBL and not of the companies which have been covered in the Research Report. This report is intended for the sole use of the Recipient. Disclosures and analyst
certifications are present in the Appendix.

Anand Rathi Research India Equities

28 November 2022 Cyient – Wider services and Sales investments to improve FY24 growth; Buy

Quick Glance – Financials and Valuations

Fig 1 – Income statement (Rs m) Fig 2 – Balance sheet (Rs m)
Year-end: Mar FY21 FY22 FY23e FY24e FY25e Year-end: Mar FY21 FY22 FY23e FY24e FY25e
Revenues (USm) 556.9 608.2 732.2 859.6 964.6 Share capital 550 552 552 552 552
Growth (%) -10.9 9.2 20.4 17.4 12.2 Net worth 29,541 31,134 33,789 37,671 42,000
Net revenues (Rs m) 41,325 45,344 59,216 71,133 79,815 T otal debt (including Pref) 2,755 3,264 4,264 3,264 2,264
Employee & Direct Costs 27,161 28,456 36,883 44,950 51,337 Minority interest - - - - -
Gross Profit 14,164 16,888 22,332 26,183 28,479 DT L/(Asset) -137 97 -27 -27 -27
Gross Margin % 34.27 37.24 37.71 36.81 35.68 Capital employed 32,159 34,495 38,026 40,908 44,237
SG&A 8,056 8,672 12,568 14,298 15,253 Net tangible assets 7,181 6,787 10,036 8,972 7,756
EBITDA 6,108 8,216 9,764 11,885 13,226 Net Intangible assets 598 477 577 677 777
EBIT DA margins (%) 14.8 18.1 16.5 16.7 16.6 Goodwill 5,830 6,185 14,101 15,460 16,818
- Depreciation 1,944 1,923 2,388 2,792 2,998 CWIP (tangible and intangible) 876 134 436 436 436
Other income 1,091 1,121 158 906 808 Investments (Strategic) 344 3,582 3,582 3,582 3,582
Interest Exp 481 434 1,215 972 972 Investments (Financial) - 866 - - -
PBT 4,774 6,980 6,319 9,026 10,064 Current Assets (ex Cash) Incl LT assets
15,130 16,928 24,135 27,231 29,183
Effective tax rate (%) 24 25 28 26 26 Cash 14,650 12,666 1,985 1,684 2,670
+ Associates/(Minorities) - - - - - Current Liabilities (ex ST Loan/Current
12,450
Portion)13,130
incl LT liabilities
16,827 17,133 16,985
Net Income 3,641 5,219 4,567 6,679 7,447 Working capital 2,680 3,798 7,308 10,098 12,198
WANS 110 109 110 110 110 Capital deployed 32,159 34,495 38,026 40,908 44,237
FDEPS (Rs/share) 33.1 47.8 41.6 60.8 67.8 Contingent Liabilities 566 553 - - -

Fig 3 – Cash Flow statement (Rs m) Fig 4 – Ratio analysis

Year-end: Mar FY21 FY22 FY23e FY24e FY25e Year end Mar FY21 FY22 FY23e FY24e FY25e
PBT 4,774 6,980 6,319 9,026 10,064 P/E (x) 24.2 16.7 19.2 13.2 11.8
+ Non-cash items 2,390 1,990 3,445 2,859 3,162 EV/EBIT DA (x) 12.7 9.4 7.9 6.5 5.9
Operating profit before WC 7,164 8,970 9,764 11,885 13,226 EV/sales (x) 1.88 1.71 1.31 1.09 0.97
- Incr./(decr.) in WC -2,686 973 3,634 2,790 2,100 P/B (x) 3.0 2.8 2.6 2.3 2.1
Others incuding taxes -1,292 -1,652 -1,751 -2,347 -2,617 RoE (%) 13.2 17.2 14.1 18.7 18.7
Operating cash-flow 8,558 6,345 4,378 6,748 8,509 RoCE (%) - After tax 9.1 12.5 13.0 15.2 16.0
- Capex (tangible + Intangible) 985 647 1,776 1,828 1,882 RoIC (%) - After tax 13.8 19.9 16.0 15.8 16.7
Free cash-flow 7,573 5,698 2,602 4,920 6,627 DPS (Rs per share) 17.0 24.0 17.4 25.5 28.4
Acquisitions 721 225 12,179 1,358 1,358 Dividend yield (%) 2.1 3.0 2.2 3.2 3.5
- Dividend (including buyback & taxes) 10 2,952 1,912 2,797 3,119 Dividend payout (%) - Inc. DDT 51.4 50.2 50.2 50.2 50.2
+ Equity raised 37 -829 - - - Net debt/equity (x) -0.4 -0.3 0.1 0.0 -0.0
+ Debt raised -1,921 -1,498 1,000 -1,000 -1,000 Receivables (days) 91 83 93 95 95
- Fin Investments -21 3,229 -866 - - Payables (days) 47 52 47 44 41
- Misc. Items (CFI + CFF) -153 -1,051 1,057 67 164 CFO:PAT % 235.0 121.6 95.9 101.0 114.3
Net cash-flow 5,132 -1,984 -10,681 -301 986 FCF:PAT % - includ M&A payout 188.2 104.9 -209.7 53.3 70.7
So urce: Co mpany, A nand Rathi Research So urce: Co mpany, A nand Rathi Research

Fig 5 – Price movement Fig 6 – Cyient’s performance

(Rs) ($m)
1,400 160 19% 20%
18% 18% 18%
17% 18%
16% 16% 16%
1,200 140 16%
16%
14%
1,000 120
12%
10%
800 100 10%
8%
600 80
6%
4%
400 60
2%
112 114 115 120 119 125 129 131 137 151
200 40 0%
Q1FY21

Q2FY21

Q3FY21

Q4FY21

Q1FY22

Q2FY22

Q3FY22

Q4FY22

Q1FY23

Q2FY23

0
Nov-17

Nov-18

Nov-19

Aug-20
Nov-20

Nov-21
Feb-18

Aug-18

Feb-19

Aug-19

Feb-20

Feb-21

Aug-21

Feb-22

Aug-22
Nov-22
May-18

May-19

May-20

May-21

May-22

Revenue EBITDA margins

Source: Bloomberg Source: Company, Anand Rathi Research

Anand Rathi Research 2

28 November 2022 Cyient – Wider services and Sales investments to improve FY24 growth; Buy

Analyst Meet takeaways

Diversified revenue base, large-deal pipeline strong
 Services revenue growth improved in FY22 and the company has
diversified its services in H1 FY23. The diversified revenue base is
likely to provide it a more steady revenue stream in H2 and beyond.
The company is aiming to grow 15% organically.
 DLM is expected to be flattish in FY23 but has secured orders in Q2.
Therefore, the present trajectory is likely to improve in FY24. We
expect it to move to $139m in FY25, from $103.1m in FY23.

Fig 7 – Services revenue growth to be more broad-based

($m)
800
732.2
700
629.1 625.2
600 550.6
500

400

300

200
103.1
100 74.6

0
Services DLM Total

FY20 FY21 FY22 FY23e

Source: Company, Anand Rathi Research

 Order intake for Services is steady but the large-deal pipeline is $1bn+
and the company is optimistic about improving the order intake ahead.
DLM order intake has improved in Q2 FY23 to $118m (up 402% q/q,
253% y/y) and the company closed a large deal from Honeywell in Q2.

Fig 8 – Order intake ($ m)

($m)
800 757

700 646
600

500
412
400

300 270

200
142
111
100

0
Services DLM Total

FY20 FY21 FY22 H1FY23

Source: Company, Anand Rathi Research

 The company is focusing on key account growth; 95% is repeat

business. Cyient’s longest relationship with a client is of 20 years and
that company has grown 20% this year. Top accounts growth has been
slow but the company expects this to improve.
 A few industry verticals (such as Rail) have fallen sharply in H1 FY23
impacting key client performance. Management expects it to start
growing in H2.

Anand Rathi Research 3

28 November 2022 Cyient – Wider services and Sales investments to improve FY24 growth; Buy

Fig 9 – Top clients growth y/y

Y/Y growth FY20 FY21 FY22 H1FY23
Top 5 -8.0% -14.7% 5.3% -4.9%
Top 10 -7.0% -17.3% 13.1% 1.2%
Source: Company, Anand Rathi Research

 Accelerate large deals. The large-deal pipeline (60% of the total

pipeline) is $1 billion+ across 12 themes. The company closed a $200m
large deal with Honeywell Anthem – Transforming Aviation, where it
is providing full-lifecycle support. The Honeywell Anthem is an aircraft
cockpit system, the first in the industry built with an always-on,
“cloud”-connected experience which improves flight efficiency,
operations, safety and comfort. Large deals were at $530m H1 FY23.
 In the Transport vertical, the largest customer has grown 20% y/y but
the rest of the clients have not grown as fast. A large North American
OEM is still struggling and the company expects low double-digit
growth for Aerospace for FY23.
 75% of the services business grew 20-22% y/y, while 25% of the
services business (Utilities & Rail) declined 10%-25% y/y in Q2 FY23.
Cyient is focusing on “green” energy-related initiatives to improve
growth in the utilities vertical. As discussed earlier, Railways is also
expected to grow in H2.
 The company would expand on the following five pillars, which have
delivered 33-35% y/y growth in Q2 FY23 and a 40% y/y increase in
order intake (TTM basis).
 Digital
 Networks
 Geo-Spatial
 Embedded
 VLSI/Chip design
 Accelerate on mega trends. These mega trends contribute 20% to total
revenue and the company aspires to take this to 50% by 2025.
 Smarter ops (7% of revenue)
 Intelligent mobility (4-5% est)
 Sustainability (3-4% est)
 Digital healthcare (2-3% est)
 Space systems (2 %)
 The company has strong client relationships. The top 5 have been the
top 5 for many years. Therefore, the weakness is perceived to be related
to client mining, which should be addressed through wider services.
Besides, it could also be on account of sales weakness, which is also
being addressed by the management.

Anand Rathi Research 4

28 November 2022 Cyient – Wider services and Sales investments to improve FY24 growth; Buy

Fig 10 – Average revenue per client from Top 5, Top 10 ($ m)

($m)
45
39.9
40
35.9
35

30 27.1
25.4
25

20

15

10

0
Top 5 average Top 10 average

FY20 FY21 FY22

Source: Company, Anand Rathi Research

 The company is diversifying beyond Aerospace, which has helped it

cushion the decline in Aerospace. Its exposure to the Transportation
vertical decreased to 35% in Q2 FY23, from 43% a year ago, and the
Communications vertical grew from 23% of revenues to 27% in the
same period. Further, through the acquisition of Citec (4% of revenue
in Q2 FY23), the company is exposed to plant engineering as well,
which it previously was not. The contribution from other verticals is
largely unchanged when compared y/y.

Fig 11 – Q2 FY22 revenue split for Cyient (consolidated) Fig 12 – Q2 FY23 revenue split for Cyient (consolidated)
Citec/Plant
Engineering
MEU/Industrial 4%
MEU/Industrial
Products
Products
15%
16% Transportation
(includes
Strategic Buyout)
Transportation
35%
(includes
New Growth Strategic Buyout)
Areas/ Medical 43%
Devices
19% New Growth
Areas/ Medical
Devices
18%

Communication/H Communication/H
i-Tech (includes i-Tech (includes
Celfinet) Celfinet)
23% 27%
Source: Company, Anand Rathi Research Source: Company, Anand Rathi Research Note: Citec was integrated for one month.

Anand Rathi Research 5

28 November 2022 Cyient – Wider services and Sales investments to improve FY24 growth; Buy

Fig 13 – Q2 FY23 revenue split for LTTS

Medical Devices
11%

Transportation
Plant Engineering 35%
16%

Telecom & Hi-tech

19%
Industrial Products
19%
Source: Company, Anand Rathi Research

 Some of the industries Cyient was focusing on were not growing great.
For example, Transportation (Within that Rail in particular). Compared
to its peers, Cyient’s transportation is smaller and heavily tilted toward
Aerospace.

Fig 14 – Transportation $ m in H1 FY23

($m)
200
184.1
180
164.8
160
140
120
100 91.1
80
60
40
20
0
Cyient KPIT LTTS

Source: Company, Anand Rathi Research Note: Transportation revenue (from services business for Cyient)

 The company aspires to do better in terms of utilisation of resources

and talent. In terms of revenue productivity, it is slightly lower than
peers KPIT and LTTS.

Fig 15 – Revenue productivity ('000)

('000)
60

50 49.1
47.2
44.2 44.9
41.6
39.8
40

30

20

10

0
Cyient KPIT LTTS

FY20 FY21 FY22

Source: Company, Anand Rathi Research

Anand Rathi Research 6

28 November 2022 Cyient – Wider services and Sales investments to improve FY24 growth; Buy

 The company is aiming at 15% organic growth and 15% inorganic

growth (assuming full-year consolidation) in FY23. We have baked in
20% growth (GAAP consolidated) in dollar terms for FY23.

The company has identified four verticals as

focus areas
Healthcare and Life sciences
 In this vertical, Cyient has strong domain expertise, global regulatory
expertise and innovative solution accelerators.
 It has had two logo wins in Q3 till now and is averaging 1-2 wins each
quarter
 This vertical is growing 60-70% y/y
 Roughly 4-5% of revenue (~35m p.a. at the Q2 FY23 consolidated
revenue rate) today, to become a $100m business in two years.
Mining, Energy and Utilities
 Green energy contributes 30% ($30m p.a. at the Q2 FY23 consolidated
revenue rate) to revenue for this vertical and the company expects to
double it in 36 months.
 Focus is on
 Alternative fuels
 Balancing capacity plants
 Carbon capture and storage
 Clients are committing much toward their carbon goals
 Delivered 50 projects amounting to $100m in this space
 Cyient is involved in the Norway government Northern Lights project.
 It is working on a digital solution to monitor carbon emissions from
industries and checking if reducing carbon goals are being met or not.
This solution is being made with the help of Microsoft, where Cyient
is bringing its domain and engineering expertise
Automotive and mobility
 This vertical has been in focus for Cyient for 2-3 years now.
 It is now 5% of revenue (~Rs35m p.a. at the Q2 FY23 consolidated
revenue rate) and is expected to grow immensely. The company is
aspiring to take this to a $100m business in 2-3 years, of which $20m-
40m could come from inorganic initiatives.
 Cyient is focusing on connectivity and automated driving not so much
on electrification and shared mobility.
 Growth would come from tier-1s and off-highway companies. The
cost of business doing with OEMs is higher than Tier 1 suppliers.
 This vertical has higher offshoring (~70%) and the company said that
the margins are similar to those of peers in this practice.

Anand Rathi Research 7

28 November 2022 Cyient – Wider services and Sales investments to improve FY24 growth; Buy

Communication
 “Smart” FTTx (fibre)
 Talent shortage has been high
 TCV for LTM was $250m in Fibre
 Transforming Telco operations and enterprise networks
 TCV of $35m in LTM from key accounts
 The company aims to take the yearly rate to $220-250m in FY24 for
this vertical.
 Wire practice is 70% and wireless is 30% of its communications
business.
Margins
 The company to make up 350bps (H1 FY23 EBIT margin at ~11.7%)
over the rest of the year. It might see some one-time costs due to
broken leases.
 Automation and efficiency to benefit margins by 2.5-3%.
 Sales focus on existing and new accounts.

Fig 16 – SG&A ticked up in H1FY23

50%

39.2%
40%

30%
21.1% 21.7%
19.5% 19.1%
20%

10% 7.6%

0%
-2.6%
-10%
-13.9%
-20%
FY20 FY21 FY22 H1FY23

SG&A as a % of Sales Growth %

Source: Company, Anand Rathi Research

 It aims to deliver 15% EBIT for FY23.

Balance sheet, Cash flows
 Capex control. The company guided to capex being in line with
competitors from H2. This should improve FCF generation.

Anand Rathi Research 8

28 November 2022 Cyient – Wider services and Sales investments to improve FY24 growth; Buy

Fig 17 – Capex as percent of sales

6%

5% 4.9%
4.3%
4%
3.4%
3.2%
3.0%
3% 2.7%

2%

1%

0%
Cyient KPIT LTTS

FY20 FY21 FY22 FY23e

Source: Company, Anand Rathi Research

Other updates
 Cyient is looking to slide into the revenue cycle of customers and not
merely stay on their cost cycles.
 Added 2,500 employees in LTM in Embedded.
 No significant furloughs seen in Q3 so far.

Anand Rathi Research 9

28 November 2022 Cyient – Wider services and Sales investments to improve FY24 growth; Buy

Factsheet
Fig 18 – Revenue, by area, %
Q2FY22 Q3FY22 Q4FY22 Q1FY23 Q2FY23
US 49 49 54 51 50
Europe 25 25 25 23 26
APAC 26 26 22 26 24

Source: Company, Anand Rathi Research

Fig 19 – Revenue, by industry, %

Q2FY22 Q3FY22 Q4FY22 Q1FY23 Q2FY23
Aerospace & Defense 32 35 32 31 27
Transportation 11 9 9 8 7
Communications 23 22 24 25 23
Portfolio 28 27 29 28 28
Energy and Utilities 7 6 6 5 5
Others (incl. M&A) - - - 3 10
Source: Company, Anand Rathi Research

Fig 20 – Onsite-offshore revenue mix, %

Q2FY22 Q3FY22 Q4FY22 Q1FY23 Q2FY23
Offshore 50 50 48 50 48
On-site 50 50 52 50 52
Source: Company, Anand Rathi Research

Fig 21 – Client concentration, %

Q2FY22 Q3FY22 Q4FY22 Q1FY23 Q2FY23
Top 5 32 28 27 28 25
Top 10 43 42 39 39 37
Client bucket growth rates %
Top 5 19 9 (17) (2) (7)
Top 6-10 44 58 24 15 22
Beyond Top 10 3 6 14 21 29
Source: Company, Anand Rathi Research

Fig 22 – Number of employees

Q2FY22 Q3FY22 Q4FY22 Q1FY23 Q2FY23
Services 12,035 12,173 12,834 13,581 15,004
Total 12,707 12,845 13,428 14,147 15,598
Source: Company, Anand Rathi Research

Fig 23 – Employee parameters, %

Q2FY22 Q3FY22 Q4FY22 Q1FY23 Q2FY23
Attrition % 24.3 29.3 26.9 27.9 28.4
Utilisation 85.0 86.2 86.1 80.9 84.6
Source: Company, Anand Rathi Research

Fig 24 – Key segments' growth Y/Y, %

Q2FY22 Q3FY22 Q4FY22 Q1FY23 Q2FY23
Region
US 8.7 12.1 17.7 20.6 20.3
Europe -4.6 10.8 4.5 -10.0 22.1
APAC 38.5 11.7 -17.6 23.5 4.1

Industry
Aerospace & Defense 13% 19% -2% 7% -1%
Transportation 0% -12% -14% -23% -31%
Portfolio 18% 15% 14% 20% 17%
Communications 5% 4% 7% 15% 20%
Source: Company, Anand Rathi Research

Anand Rathi Research 10

28 November 2022 Cyient – Wider services and Sales investments to improve FY24 growth; Buy

Valuations
The stock trades at 13x FY24e EPS of Rs61 and 12x FY25e EPS of Rs68.
Revenue grew 9% in FY22, slower than the industry on account of a gradual
recovery in Aero and sustained weakness in Rail. However, the company
seems to be returning to growth, with the deal momentum building up on
the Services side, more so in the Communications vertical, which is now its
largest Services vertical.
Ahead, we expect revenue to clock 19% compound annual growth (incl.
acquisitions) over FY22-24. On a positive note, management is seeing
demand increasing steadily in A&D and expects it to clock 10% cc (low
double digit) growth for the year.
The EBIT margin expanded 380bps in FY22 (to 13.9%) but is expected to
slip to 12.5% in FY23 before stepping up to ~13% in FY24 and staying at
~13% in FY25. This reflects high wage pressure, attrition, re-opening costs,
and M&A expenses. Cyient will have offshoring and utilisation (to a small
extent) as levers to offset some of these cost pressures. Given its better
execution on the margin front (compared to growth) and, taking into
consideration our expectations of it reducing the gap with industry level
growth in FY23, the stock offers good potential. We, however, read the
company’s acquisitive strategy as less capital-efficient, reflected in the lower
target multiple.
Our FY23, FY24 and FY25 estimates are largely unchanged. Our target is
Rs1,030 (unchanged), reflecting slower growth and order intake at present,
leading to delays in growth picking up. The company recently made three
acquisitions and one strategic buyout, which should add 14-15% to FY23
revenue, included in our estimates. Clearly, Cyient’s track record in
acquisition is mixed at best; hence, we believe the company carries some
integration risks.
Our target price is based on 15x FY25e EPS. At this price, Cyient will trade
at a ~40% discount to the sector leader, LTTS, which we think is fair, given
the difference in portfolio and performance of the two large pure-play
engineering-services companies.

Fig 25 – PE band
60
55
50
45
40
35
30
25
20
15
10
5
0
Aug-19

Nov-19

Sep-20

Dec-20

Aug-21

Sep-22
Mar-19

May-19

Apr-20

Feb-21
Jan-20

Jun-20

May-21

Oct-21

Jan-22

Mar-22

Jun-22

LTTS KPIT Cyient TCS

Source: Bloomberg, Anand Rathi Research

Risk
 M&A-integration-related

Anand Rathi Research 11

Appendix
Analyst Certification
The views expressed in this Research Report accurately reflect the personal views of the analyst(s) about the subject securities or issuers and no part of the
compensation of the research analyst(s) was, is, or will be directly or indirectly related to the specific recommendations or views expressed by the research analyst(s)
in this report. The research analysts are bound by stringent internal regulations and also legal and statutory requirements of the Securities and Exchange Board of
India (hereinafter “SEBI”) and the analysts’ compensation are completely delinked from all the other companies and/or entities of Anand Rathi, and have no bearing
whatsoever on any recommendation that they have given in the Research Report.

Important Disclosures on subject companies

Rating and Target Price History (as of 25 November 2022)
TP Share
1400 Cyient Date Rating (Rs) Price (Rs)
18 18-Oct-19 Hold 505 447
1200 19 17-Jan-20 Hold 500 452
29 20 31-Mar-20 Buy 350 452
1000 30 21 11-May-20 Hold 210 200
31 22 29-Jun-20 Sell 230 276
28 23 20-Jul-20 Sell 250 284
800
12 1415 16 27 32 24 15-Oct-20 Sell 355 375
33
600 11 26 25 19-Oct-20 Hold 400 388
45 6 10 13 26 25-Jan-21 Hold 690 603
17
9 18 19 25 27 25-Apr-21 Buy 900 688
400 8
2 3 7 23 24 28 17-Jul-21 Buy 1240 1057
1 20 29 17-Oct-21 Buy 1585 1158
200 22
21 30 27-Jan-22 Buy 1460 940
31 25-Apr-22 Buy 1250 900
0 32 25-Jul-22 Buy 1160 778
May-15
Jan-14
Jun-14

Mar-16

Feb-17

Jun-18

Mar-20

Feb-21

Jun-22
Nov-14

Aug-16

Nov-18

Aug-20

Dec-21
Jul-17
Dec-17

Apr-19

Jul-21

Nov-22
Oct-15

Oct-19

33 17-Oct-22 Buy 1030 762

Anand Rathi Ratings Definitions

Analysts’ ratings and the corresponding expected returns take into account our definitions of Large Caps (>US$1bn) and Mid/Small Caps (<US$1bn) as described
in the Ratings Table below:
Ratings Guide (12 months)
Buy Hold Sell
Large Caps (>US$1bn) >15% 5-15% <5%
Mid/Small Caps (<US$1bn) >25% 5-25% <5%

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