Release Date: October 24, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Cyient Ltd (BOM:532175, Financial) successfully divested a portion of its stake in Cyient DLM Limited, raising approximately INR 875 crores, which will be used for capital requirements and debt retirement.
- The company has established a wholly owned subsidiary, Cyient Semiconductors Private Limited, to focus on ASIC design and chip sales, aligning with strategic growth objectives in the semiconductor sector.
- Cyient Ltd (BOM:532175) reported a 25% quarter-on-quarter growth in PAT for the DET segment, driven by revenue growth, EBIT improvement, and reduced interest costs.
- The company announced an interim dividend payout of INR 12 for FY '25, reflecting strong financial performance and shareholder returns.
- Cyient Ltd (BOM:532175) has made strategic acquisitions in the energy sector, including Abu Dhabi & Gulf Computer Establishment, to strengthen its presence in the Middle East, the world's largest energy market.
Negative Points
- The DET segment experienced a year-on-year revenue degrowth of 3.3% in constant currency, indicating challenges in maintaining growth momentum.
- The sustainability segment faced a 6.4% quarter-on-quarter decline due to seasonal headwinds, particularly the vacation period in Europe.
- Order intake for the quarter was down 14.7% compared to the same quarter last year, raising concerns about future revenue growth.
- The headcount has been decreasing over the past few quarters, which may indicate challenges in scaling operations or a shift towards contingent workforce utilization.
- The number of 20 million-plus clients has decreased from seven to four, suggesting potential client-specific challenges or project completions affecting revenue streams.
Q & A Highlights
Q: How should we think about growth and margin trajectory in the second half, particularly for Q3 versus Q4?
A: Karthikeyan Natarajan, CEO, stated that Q3 is expected to be stronger than Q2, and they maintain the view that H2 will be better than H1. Prabhakar Atla, CFO, added that they are sticking to the previous guidance of a 15% EBIT margin by Q4.
Q: The headcount has been decreasing over the past few quarters. Can you explain this trend?
A: Karthikeyan Natarajan explained that they are using a contingent workforce for project-based engagements, which provides flexibility. Additionally, initiatives to improve productivity and automation are contributing to this trend.
Q: The number of 20 million-plus clients has decreased. What is the outlook for these clients?
A: Karthikeyan Natarajan mentioned that movements in client buckets are expected due to the project-based nature of their business. They anticipate corrections by Q4, improving the situation.
Q: Is the revenue growth in line with expectations, and does the guidance for the second half remain unchanged?
A: Krishna Bodanapu, Executive Vice Chairman, confirmed that they have a line of sight towards a flattish year and a 16% EBIT margin. They expect H2 to be stronger, with Q3 being seasonally weak but still maintaining growth.
Q: Can you elaborate on the seasonality in the sustainability vertical and its impact?
A: Krishna Bodanapu explained that the seasonality is due to European holidays, which will be a recurring phenomenon. This was not evident last year due to a major program ramp-up. They expect sequential growth from the next quarter.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
