Cyient shares plunge 29% this month – What led to the sharp fall?

Shares of Cyient Ltd. have witnessed a sharp decline of 29.38% this month, dropping ₹559.60 to close at ₹1,344.90 as of January 24, 2025. This steep fall was triggered by the company’s disappointing December quarter results and a downward revision in its revenue growth and EBIT margin guidance.

Key reasons behind the decline

Advertisement

  • Revenue Guidance Cut: Cyient revised its revenue growth forecast for its Digital, Engineering, and Technology (DET) business, now expecting a 2.7% year-on-year decline for FY2025, compared to earlier guidance of flat growth.
  • EBIT Margin Revision: The company also slashed its EBIT margin guidance for Q4FY2025 to 13.5%, down from the previously estimated 16%. Wage hikes and project delays were cited as the primary reasons behind this cut.
  • Leadership Changes: The sudden resignation of CEO Karthikeyan Natarajan, who served only 20 months at the helm, added to the uncertainty surrounding the company’s outlook.

Brokerage Updates

The disappointing results prompted multiple brokerages to revise their ratings and price targets for the stock:

  • JPMorgan: Downgraded Cyient from “overweight” to “neutral,” reducing the price target to ₹1,750 from ₹2,300.
  • Motilal Oswal: Downgraded the stock to “sell” with a revised price target of ₹1,350, down from ₹2,100.
  • IIFL: Maintained its “ADD” rating, citing attractive valuations and a strong order book, but lowered the price target to ₹1,670 from ₹1,810.

Analyst Recommendations

Out of 23 analysts covering Cyient, the breakdown of their ratings is as follows:

  • Buy: 12 analysts
  • Hold: 7 analysts
  • Sell: 4 analysts

Market Performance

The stock has also been under pressure due to broader market sentiment and competition in the technology sector. Despite the challenges, Cyient’s management has set a target of achieving a 16% EBIT margin by FY2026, focusing on revenue growth in the near term.


Disclaimer: The information provided is for informational purposes only and should not be considered financial or investment advice. Stock market investments are subject to market risks. Always conduct your own research or consult a financial advisor before making investment decisions. Author or Business Upturn is not liable for any losses arising from the use of this information.