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Cyient posted disappointing Q1FY16 result

Cyient provides engineering solutions, including product development and life-cycle support, process, Information Technology(IT), network and content engineering to major organizations. The Company provides services to multiple industries such as Aerospace, Consumer, Energy, Medical, Heavy Equipment, Hi Tech, Transportation, Telecom and Utilities.

Yesterday, Cyient announced its Q1FY16 result, wherein the revenue decreased by 0.5 per cent to Rs 726.3 crore from Rs 730 crore in Q4FY15. The dollar revenue decreased by 2.6 per cent and the constant currency revenue decreased by 2.5 per cent on quarterly basis. Cyient posted growth of 1.6 per cent, each in the Engineering & DNO revenue segment on quarterly basis. The Softential and Rangsons revenue segments suffered de-growth by 32.1 per cent and 34.6 per cent respectively in Q1 FY16, Softential was impacted by the cyclicity of revenue. North America region excluding Softential grew by 3.6 per cent. Q1 was a muted quarter for Rangsons but was on the expected lines. Q1 was impacted due to the deferment of delivery of a large customer order of around USD3.2 Million to Q2. Growth in Rangsons is expected to pick up from Q2. On constant currency side Europe region was down by 6 per cent.

Despite of a wage hike mainly due to improvement in operational metrics and favorable exchange impact, the operating profit margin improved by 33 basis points. The PAT of Cyient in Q1FY16 compared Q4FY15 slid down by 20.13 per cent, because of lower other income, lower gain on forward contracts and increase in quarter on quarter tax rate. The company added 26 customers during the quarter.

Commenting on the results, Mr. Krishna Bodanapu, Managing Director and Chief Executive Officer of Cyient said, “Financial performance in Q1 FY16 was in line with expectations. Growth was muted in the services business and revenues were lower than expected in Rangsons. This was expected especially considering the seasonality in Softential & Rangsons. Business pipeline continues to remain strong and we are confident that revenue momentum will accelerate from Q2 onwards."

On yearly basis Cyient posted good returns, the revenue grew by 16.8 per cent to Rs 726.3 crore against Rs 621.7 crore, the dollar revenue stood at USD 11.43 crore, rising by 9.9 per cent year on year. The constant currency revenue increased by 14.3 per cent on yearly basis. The net profit rose by 9.2 per cent to Rs 98.83 crore against Rs 82.42 crore.

Mr. Ajay Aggarwal, Chief Financial Officer, said, “We were able to improve Operating margins during the quarter despite wage hike with operational improvements and this momentum on margin improvement continues to be the focus area during the year.”

Yesterday, after the result announcement Cyient shares closed around 5 per cent lower, at Rs 532.

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