On Saturday, Ambit Capital initiated coverage on CYIENT (CYL:IN) with a Buy rating and set a price target of INR 2,450. The firm sees the company's diversification into energy, utilities, and semiconductors as a complement to its traditional aerospace strength. Despite near-term project delays, the long-term outlook for Cyient's core segments is positive, supported by a 13-year order backlog and ongoing demand for new aircraft.
Ambit Capital predicts that the aerospace demand and energy security/transition will continue to be strong for Cyient. The company is expected to benefit from further investments in aerospace supply chains, which will enhance its production efficiency and maintenance, repair, and overhaul (MRO) services. Additionally, sustainability and new growth areas like semiconductors and automotive are anticipated to be further growth drivers.
The firm forecasts double-digit earnings before tax (DET) growth for Cyient, with an 8.5% increase in FY26 and an 8.3% increase in FY27E following a softer FY25E. The DET EBIT margin is projected to improve by 120 basis points over FY26/27E to 15.7%. According to Ambit Capital's assessment, Cyient's DET valuations are currently at a roughly 50% discount to engineering research and development (ER&D) peers.
The price target of INR 2,450 suggested by Ambit Capital is based on 30 times the forecasted FY26 earnings per share (EPS). This valuation reflects the firm's confidence in Cyient's growth potential and its position in the market relative to its peers.
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