Cyient rallies after Q2 PAT rises 3% QoQ

Cyient rose 3.30% to Rs 378.40 after the company's consolidated net profit rose 3.07% to Rs 83.90 crore on 1.16% increase in revenue from operations to Rs 1,003.30 crore in Q2 September 2020 (Q2FY21) over Q1 June 2020 (Q1FY21).

The PAT increased mainly from higher operating income driven by higher volume and efficiency. Consolidated profit before tax (PBT) stood at Rs 109 crore in Q2FY21, gaining 0.46% from Rs 108.60 crore in Q1FY21. Total tax expense dropped 7.72% to Rs 25.10 crore in Q2FY21 over Q1FY21. The Q2 result was announced after market hours yesterday, 15 October 2020.

Services revenue stood at $114.10 million, registering a growth of 1.7% QoQ and a drop of 18.7% year-on-year (YoY). DLM revenue was at $20.90 million, recording a growth of 13.3% QoQ and a 12.3% fall YoY. Order intake in Q2FY21 is at $127.3 million, increased by 9% QoQ.

In Q2, the cash flow conversion stood at 131.4% for group and 132.2% for Services. DLM has consumed cash of Rs 1.8 crore in Q2FY21. Cash and cash equivalents stood at a healthy level of Rs 1350.90 crore.

Consolidated EBIT margin stood at 11%, up by 586 bps QoQ. EBIT margin for services was at 12.2%, up 542 bps QoQ. EBIT margin for DLM at 4.7%, compared to -4.6% in Q1FY21.

Commenting on the Q2 results, Krishna Bodanapu, the managing director (MD) and chief executive officer (CEO), said that: "Q2 FY21 results are in line with our expectations. We recorded a revenue of $135 million which was higher by 1.3% QoQ and lower by 16.3% YoY in constant currency. Growth in Services business across Transportation, Communications and Portfolio BUs was offset by Aerospace & Defense BU decline. The DLM business grew by 13.3% QoQ. The EBIT margin is higher by 586 bps QoQ. We generated Free Cash Flow of $27.3 million in Q2FY21."

"This quarter we focused on setting up the business back on a growth path. We continued our rigor on efficiency improvement and building pipeline for the business. We won key projects which sets us up for a better H2. We are focused on building a strong pipeline with large opportunities and rigor on account mining across key clients. This quarter we also restructured the organization to realign ourselves to the market opportunities and focus on growth in key industries. The new structure will enable us to function in a more agile and efficient manner."

"Our outlook for H2 is positive and we expect growth based on the outlook and pipeline across most sectors. We will see a decline in the aerospace business due to seasonality challenges and lower number of workdays. For the year we expect a double digit decline in revenue and margins will be similar to FY20 margins," he signed off.

Cyient is a global engineering and technology solutions company.

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