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.
2 Likes
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.
1 Like
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).
2 Likes
Cyient
Family trust + promoters bought shares worth ~10 cr yesterday! Best part scrip tanked 13%, fair deal ?
1 Like
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
Cyient Q4FY25 Quaterly and FY25 Update
Q4 Consol
Revenue Up 2.6% YoY to 19092 Mn
EBITDA Down -9.7% YoY to 3027 Mn ( Margins at 15.,9% Vs 18.0%)
PAT Down -12.2% YoY to 1704 Mn ( Margins at 8.9% Vs 10.2%)
FY25 Consol
Revenue Up 3% YoY to 76304 Mn
EBITDA Down 12.2% to 11433 Mn ( Margins at 15.5% Vs. 18,2%)
PAT Down 10% to 6148 Mn ( Margins at 8.4% Vs. 9.6%)
FY25 DET
Revenue Down -1.6% to 58158 Mn ( -2.5% Guided at worst)
EBIT Down 16.6% to 1058 Mn ( EBIT Margin at 13.5% Vs. 15.9%)
DET PAT at INR 605 crores, with YoY de-growth of 12.2%
Concall Highlights
Business Highlights
Having balanced Portfolio around three vectors
-
DET - evolving to Digital Engineering more.
-
Semiconductor - Seeing tremendous interest from customers and potential customers.
-
DLM - Continues to Do well (Grew 27% YoY)
H1 to be Softer
-
The month of March has seen a negative surprise in terms of Ramp up of deals, where few Projects have got on hold, some have been pulled off. Because of this Q1 will have some impact. But from a business perspective client pipeline is there. Customers are committed to the contracts. And Q2 is also a seasonally weak quarter due to European holidays impacting the sustainability business.
-
Renewing some contracts but there is some slowdown in new business being awarded but the contract will be signed.
-
In Investor PPT - โWhile there are some uncertainties in the near term, we are working very closely with our customers in navigating through the current challenges. We expect this to last at least through the first half of FY26.โ
Organizational Updates
-
Got Approval to Spinoff this as a different entity. Suman has been appointed as the CEO in Semicon Subsidiary.
-
Stopping the Guidance - given the Macro situation. This is temporary. As Sukamal - New CEO of Cyient Ltd, as newly joined and need some time to be stable and board has also strongly recommended to them.
-
Sukamal Banerjee as ED and CEO of Cyient Ltd.
-
Atla Prabhakar Joined as President and CFO - Previously at Honeywell Automation - into Aerospace, Digital and other Engineering Vertical and Emerging technologies
-
Breaking Sustainability Vertical into Mining, Geospatial
Two key wins
-
Received large order for Green Hydrogen project in Norwayโs RE ambition for Ferrys Power generation - (Hydrogen Power) - Deal Size not given but it is significant as far as energy segment is concerned
-
Alliance with Micware Navigations - into intelligent Mobility and Automobile segment has shown good growth. - Focusing on safer, smarter, and more sustainable transportation systems.
Debt Position
Reduced Debt Position Significantly
Cleared All the Long term Debts of the DET business and DET is long term debt free business from now on.
Pipeline
No Impact in Pipeline but there is a pause in the decision making by the clients.
Segmental Business
-
Healthcare has grown and seen momentum.
-
Seen some growth in Automotive.
-
Going into fY26 - some segments are seeing growth but uncertainity is there in the business. Structurally Impact of Macro was felt across all geographies. NA was muted growth.
Top 5 Customers grew ~5% and Top 10% customers also grew more than ~7% There is no structural changes.
Margins
-
Cost Management Was effective for FY25 and FY24, Continue to do Wage hikes in FY26, Will be prudent in Investments to be made.
-
Previously said that 16% but now we will be stabilizing at 15% margin over the next 24 months.
-
Wage hike and Investments to dent margins but will bring cost rationalisations.
Use of Cash Balance - Almost 1300 Cr
-
Cash will continue to be strong, reducing the capex spends which was at one time 3% of Revenue.
-
There might be some dividends Cut out, but board has to decide. But this cut will be on account of some investment to be made, other than that no changes to policy will be there. Some inorganic growth angle may come in some of the emerging technologies to clog some gaps
-
Semiconductor business will also require some cash so will put that to use there.
Disc - Not invested