Buy! This multibagger IT stock hit lifetime high today, and no, it's not TCS
The Hyderabad-based company posted 16.2 per cent rise in net profit at Rs 121.5 crore for the quarter ended on March 31, 2018, compared to the year-ago period.
IT stocks have been flavour of the day in Tuesday's trade with the Nifty IT index touching record high thanks to massive gains in Mindtree and Tata Consultancy Services (TCS). However, there is one stock that is not a part of IT index that rallied a whopping 10 per cent hitting its lifetime high on the bourses. This stock has given 327 per cent return in the last five years with more gains expected on the stock.
We are talking about midcap IT firm Cyient which on Thursday posted 16.2 per cent rise in net profit at Rs 121.5 crore for the quarter ended on March 31, 2018, compared to the year-ago period. The Hyderabad-based company had posted a net profit of Rs 104.6 crore in the corresponding quarter a year ago, Cyient said in a filing to BSE. The IT firms' revenue increased 12.8 per cent to Rs 1,061.8 crore in the said quarter against Rs 941 crore in the year-ago period.
Reacting to strong Q4 numbers, the stock gained as much as 9.72 per cent to Rs 710. Going by brokerage Motilal Oswal Securities, the stock could well hit a target of Rs 750 soon. MOSL expects Cyient to continue with industry leading growth.
"Strong traction in most areas, stable margins and expected ETR savings have led us to increase our FY19/20 EPS estimates by 10 per cent to 12 per cent. At 15.4/13.7 times FY19/20E earnings, Cyient is trading at a 10 per cent discount to peers despite outperformance – a gap we expect to get bridged," said MOSL.
"Our price target of Rs 750 discounts forward earnings by 16x. Buy," the brokerage added.
Edelweiss Securities is even more bullish on the stock and sees a target price of Rs 785, an upside of 10.6 per cent from its lifetime high of Rs 710.
"We believe Cyient’s superior service offerings, led by ER&D and IoT, will help it clock revenue CAGR of 13 per cent over FY18-20E. Further, strong execution and lower tax rate will drive EPS CAGR of 13.5 per cent," said Edelweiss.
At current levels, the stock trades at 13.2 times its FY20E EPS. The brokerage maintained ‘BUY/SP’ with revised target price of Rs 785 (16x FY20E EPS).