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CYIENT LTD (CYIENT)
PRICE: RS.578 RECOMMENDATION: SELL
TARGET PRICE: RS.539 FY16E P/E: 14.6X
Headline numbers came above estimates. However, revenue growth and
margin improvement were largely led by early recognition of revenues in
Softential. Excluding this, revenues grew marginally in CC terms. We have
been uncomfortable with the attached quarterly volatility in revenue
growth. The management has indicated a general pick-up in sentiments and
a good pipeline. Our earnings estimates for FY15 stand at Rs.32 (Rs.29.7) per
share and for FY16 at Rs.39.7 (Rs.35.3) per share. We have consolidated
Rangsons' financials WEF February 2015. Our FY16 - based PT stands revised
to Rs.539 (v/s Rs.452). Current valuations are at 14.6x FY16 estimates, which
are in line with some of the larger peers. Post the recent spike in price, we
downgrade the stock to SELL (REDUCE earlier). While the recent revenue
growth is encouraging, we believe that, the current valuations discount
most of the potential positives. Cash / cash equivalent is expected to be
about Rs.52 per share by FY16 end
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