Motilal Oswal Downgrades Cyient, Sets Target Price at Rs 830

Cyient Reports Disappointing Quarter, Stock Price Takes a Hit

Cyient, a leading engineering and technology solutions company, has reported a decline in revenue for its DET business in the fourth quarter of fiscal year 2026. According to the company's financial results, the DET business recorded revenue of USD163 million, a decrease of 2.4% quarter-over-quarter (QoQ) in constant currency (CC) terms. This falls short of Motilal Oswal's estimate of 2.1% growth.

Breaking down the DET business revenue further, Transportation & Mobility segment reported a growth of 4.5% QoQ CC, while Network & Infrastructure/Strategic Units witnessed a decline of 3.6% and 12.4% QoQ CC, respectively. Additionally, the adjusted earnings before interest and taxes (EBIT) margin for the DET business came in at 12.4%, missing Motilal Oswal's estimate of 12.7%. The adjusted profit after tax (PAT) for the DET business was down 7.6% QoQ and 9.1% year-over-year (YoY) at INR1,382 million, which was lower than the estimated INR1,616 million.

The company's board has approved a buyback plan worth INR7.2 billion, which represents 6.4 million equity shares each at a price of INR1,125. This buyback plan accounts for 5.76% of the company's total paid-up equity share capital.

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Valuation and Outlook

Motilal Oswal values the DET business at 12 times the estimated earnings per share (EPS) for fiscal year 2028, factoring in gradual margin improvement to approximately 13.5% by fiscal year 2027, and a modest growth outlook. The research firm continues to assign a 20% holding company discount to the DLM stake. Based on a stock price-to-earnings ratio (SoTP-based) valuation, Motilal Oswal estimates a target price of INR830 for Cyient, implying an 11% downside.