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- 13 Jan 2023
- ICICIdirect Research
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CYIENT REPORTS STRONG Q3 WITH CONTRIBUTIONS FROM ACQUISITIONS
CYIENT - 1290 Change: -6.60 (-0.51 %)News: The group revenue was US$197 mn, up 13.4% QoQ, 28.6% YoY in CC terms while growth in dollar terms was 12.7% QoQ, 24.8%YoY. IT services revenue grew 11.9% QoQ, 34.4% YoY in CC terms with organic contribution of 3.7% QoQ, 10.6% YoY. DLM business grew 22.8% QoQ in dollar terms. Region wise the revenue growth was led by Europe (30.2% of mix) reporting growth of 30.2% QoQ while North America region grew 5.4%. Vertical wise in CC terms on the organic front Aerospace grew 4.4% QoQ while MEU (Mining, Energy, Utilities & Consulting) & New growth areas grew by 6.8% QoQ & 8% QoQ, respectively. Rail & Communication continued to be laggards reporting -4.9% & 1.3% QoQ growth. The company reported Group EBIT margin of 12.3% while Services EBIT margin was 13.3% and the normalised Services EBIT margin excluding acquisitions & exceptional items was 15.1%, up by ~190 bps sequentially. The company indicated that the margin improvement was due the headwinds of operational efficiency +150 bps, volume impact on SG&A spend +140 bps & currency benefit +75 bps mitigated by the tailwinds of lower capacity -130 bps & increased SG&A spend -50 bps.
Views: The company is guiding better growth in Q4 to be driven by Aerospace, Mining & Automative. The company continues to maintain 27-28% revenue guidance in CC terms for FY23 out of which 14-15% will be contributed by acquisitions. It continues to guide US$1 bn revenue and | 60 EPS in FY24. Revenue growth to be aided by continued spending on carbon neutral solutions across manufacturing industries and rebound in aerospace vertical
Impact: Positive