Reasonably good results when compared to others. But DLM seems better.
2f87ebd2-03da-4f11-a58a-bed080c1ae06.pdf (682.2 KB)
Very poor results by Cyient. Management guided for high single digit growth and delivered 5 pc degrowth. Have been missing guidance regularly.
Invested and looking to exit.
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Few of my takeaways from Q1 FY25 of Cyient Limited
๐๐จ๐ซ๐ฉ๐จ๐ซ๐๐ญ๐ ๐๐ซ๐๐ฃ๐๐๐ญ๐จ๐ซ๐ฒ:
- Cyient faced significant operational challenges in Q1 FY25, resulting in weaker-than-expected performance.
- However, the company is confident of a robust recovery starting Q2, driven by a strong order book, double-digit growth in order backlog, and healthy engagement with top customers.
- The management expects H2 FY25 to be stronger than H1, with flattish year-on-year revenue growth for the full year.
๐๐ญ๐ซ๐๐ญ๐๐ ๐ข๐ ๐๐ฅ๐ฎ๐๐ฉ๐ซ๐ข๐ง๐ญ:
- Cyient has announced the setup of a wholly-owned subsidiary to drive dedicated focus on turnkey ASIC design and chip sales through a fabless model for analog mixed-signal chips.
- This move is aimed at capitalizing on the growing semiconductor market opportunities, leveraging Cyientโs existing capabilities in design, fabrication, and testing.
- The new semiconductor business unit is expected to unlock value for shareholders, akin to the success of Cyient DLM.
๐๐๐ซ๐ค๐๐ญ ๐๐ฒ๐ง๐๐ฆ๐ข๐๐ฌ:
- The global semiconductor market is poised for significant growth, expected to reach $1 trillion by 2030, with the Indian market forecast to reach $100 billion by 2030.
- Cyient is well-positioned to capitalize on these opportunities, given its extensive portfolio of intellectual properties, long-standing client relationships, and global capabilities.
- The company is also making progress in emerging technologies like Generative AI, winning multiple projects across various business segments.
Industry Tailwinds:
- The semiconductor industry is experiencing strong demand, driven by the increasing adoption of analog mixed-signal chips across various industries, including automotive, healthcare, and industrial automation.
- Cyientโs expertise in designing and fabricating these specialized chips aligns well with the industryโs growth trajectory.
Industry Headwinds:
- Delays and project shifting in Q1 FY25, particularly in the connectivity and sustainability segments, impacted the companyโs performance.
- The continuing stress in the rail sector also contributed to the weaker-than-expected results.
๐๐ง๐ฏ๐๐ฌ๐ญ๐จ๐ซ/๐๐ง๐๐ฅ๐ฒ๐ฌ๐ญ ๐๐ฎ๐๐ฌ๐ญ๐ข๐จ๐ง๐ฌ:
- Analysts were surprised by the magnitude of the miss in Q1 FY25, questioning the companyโs forecasting accuracy and process.
- The management acknowledged the challenges and indicated that they are working to refine the forecasting process, incorporating lessons learned from the recent experiences.
- The company is also focusing on improving the predictability of the project-based business, especially in connectivity and sustainability, to better manage potential delays and ramp-ups.
Competitive Landscape:
Cyientโs established capabilities in design, fabrication, and testing of analog mixed-signal chips, along with its growing semiconductor business, position the company as a unique player in the evolving Indian semiconductor landscape.
๐ ๐ฎ๐ญ๐ฎ๐ซ๐ ๐๐ซ๐จ๐ฃ๐๐๐ญ๐ข๐จ๐ง๐ฌ:
- For FY25, the company has provided a flattish year-on-year revenue growth guidance, citing a prudent approach after the Q1 miss.
- However, the management remains confident in achieving a strong recovery in Q2 and H2, driven by a robust order book and growing engagement with top customers.
- The company aims to reach its previous yearโs EBIT margin range of 16% by the end of FY25, as the revenue growth trajectory strengthens.
๐๐๐ฉ๐ข๐ญ๐๐ฅ ๐๐๐ฉ๐ฅ๐จ๐ฒ๐ฆ๐๐ง๐ญ:
- Cyient has been proactively managing its debt position, which has seen a 44% year-on-year reduction in Q1 FY25.
- The company is focused on maintaining a healthy balance sheet to support its growth initiatives, including the new semiconductor business.
Opportunities & Risks:
- The growing semiconductor market and Cyientโs unique end-to-end capabilities present significant opportunities for the company to drive long-term growth and value creation.
- Execution risks related to the new semiconductor business, as well as potential delays in project ramp-ups, remain key concerns that the management needs to address.
๐๐๐ ๐ฎ๐ฅ๐๐ญ๐จ๐ซ๐ฒ ๐๐ฅ๐ข๐ฆ๐๐ญ๐:
The Indian governmentโs various initiatives to promote the domestic semiconductor industry, such as the Production-Linked Incentive (PLI) scheme, provide a supportive regulatory environment for Cyientโs semiconductor aspirations.
๐๐จ๐ง๐ฌ๐ฎ๐ฆ๐๐ซ ๐๐ฎ๐ฅ๐ฌ๐:
- Cyientโs top 10 customers have seen double-digit year-on-year growth, indicating their continued confidence in the companyโs capabilities.
- The management is focused on improving the predictability of project-based businesses to better align with customer needs.
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The immediate resignation of the CEO can be due to the severe underperformance of the Cyient group including lower guidance for 2025 and underperformance at Cyient DLM(subsidiary).
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Cyient
Family trust + promoters bought shares worth ~10 cr yesterday! Best part scrip tanked 13%, fair deal ?
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Interesting developments, particularly when read with the above news
https://www.business-standard.com/companies/news/cyient-invests-100-mn-in-semiconductor-business-plans-more-funds-125040800761_1.html