JPMorgan has reiterated its Overweight rating on Cyient with a target price of ₹1,750, viewing the recent 8% decline in Cyient’s stock over the past two days as overdone. The stock’s fall came despite the announcement of a new external CEO, which the brokerage considers a positive strategic move.
Key Points:
- The stock reaction is seen as unjustified, as Cyient should be credited for appointing an experienced external CEO, signaling a positive leadership transition.
- Investor sentiment remains cautious, with feedback indicating hesitancy to invest immediately.
- Near-term catalysts include:
- Q4 Earnings: Cyient needs to deliver flat to positive constant currency (CC) QoQ revenue growth and maintain flattish margins in line with guidance.
- New CEO’s Strategic Vision: Investor focus will be on the new CEO’s comments on any strategic overhaul and medium-term targets.
Valuation Insight:
- Cyient is the cheapest IT/ERD stock in its peer group, trading at a 55% discount to the peer average, which provides a compelling valuation opportunity for investors.
