Cyient to clock double-digit growth in FY22: Analyst
Hyderabad: Global engineering and digital technology solutions company Cyient is likely to register double-digit growth in this financial year. "The company's design-led manufacturing (DLM) business will grow 20 per cent in FY22. The stock quotes seems attractive compared to the sector," said equity research analyst Anand Rathi in its business outlook of the Hyderabad-Headquartered firm.
Cyient's Services business rose 15 per cent at $119 million excluding global aerospace and defence (A&D) business. The growth led by rail (up 17 per cent), communications (18 per cent), utilities (10 per cent) and portfolio (10 per cent). The A&D business has bottomed out and is showing 2 per cent growth, reducing the drag. Order intake was showing traction with an increase of 21 per cent at $120 million.
Cyient's Services division was flat quarter-on-quarter largely due to the A&D business, which has bottomed out to grow sequentially. Order intake improved in Q1, despite weakness and some order cancellations in the A&D, reflecting strength in other segments. The company signed a large deal with the UK government in Q2 and is increasing its participation in other large deals, the analyst said.
The DLM business had strong order intake, offering comfort on growth. Margins are expanding, supply-side challenges are manageable. The margins were also benefitted from higher offshoring at 47.3 per cent y-o-y growth. As growth returns to services, margins are likely to hold up while headwinds include ESOP/RSU costs and potential wage hikes.