Indian engineering firm Cyient plans to sell stake in underperforming units

Cyient Limited, an Indian engineering and technology solution provider for more than two dozen Fortune 500-companies, plans to sell stakes in units that are underperforming.

“We are aggressively considering what makes sense in our portfolio,” Cyient Managing Director Krishna Bodanapu said in an interview to Bloomberg TV on Monday. “We are a bit complex and one of the objectives for this calendar year is to simplify things and divest out of businesses that do not make sense for us.” 

Bodanapu did not name the divisions that are on the chopping block. The company has signed a definitive agreement with Innovation Communications Systems to spin off the software design radio division, it said in a notice to the stock exchange on Jan. 1. In the past Cyient sold its drone and IT services businesses, he said.

The Hyderabad-based company is betting on Covid-led demand for technology solutions to continue for the next few years as more industries adopt it. Communications and medical technology industries are doing well, Bodanapu said. Aerospace and defense sectors should see a return to normalcy in the next 12 to 18 months, he added.

The company’s net income beat analysts’ estimates for the quarter ended December, and it expects to close the fiscal year to March with double digit growth.

“We believe there is still a lot of runway for our business, and therefore those parts of the business will start firing which will lead to acceleration of the business,” Bodanapu said.

The company wants to use its zero-debt status to raise money to fund inorganic growth, although Bodanapu declined to identify the targets or the quantum he is willing to spend.