Momentum Pick: With 27% returns in 12 months, Cyient poised for another 18% upside

Cyient shares have gained nearly 10% in the last three trading sessions. The rally was also on the back of strong Q4 earnings posted by the company on April 20, Thursday. The uptrend is likely to sustain going ahead, aided by strong technicals.

The stock scaled a new 52-week high of Rs 1,230 on Monday. The stock ended at Rs 1,171.50 on the NSE on Monday and was up by Rs 11.85 or 1.02%.

The stock has outperformed the Nifty50 over a 12-month period and given over 27% returns as against 3.3% during this period

Cyient is a consulting-led, industry-centric, technology solutions company. For the quarter ended March 31, 2023, the company reported a net profit of Rs 163 crore, which was higher by 6%, compared to Rs 154 crore it posted in the same quarter of the last year. On a sequential basis, the net profit rose 4% from Rs 156 crore in the preceding December quarter. Revenue from operations during the quarter surged as much as 48% to Rs 1,751 crore as against Rs 1,181 crore in the year-ago period.

Should you buy it to ride the momentum?

Axis Securities on Cyient: Buy | Target: Rs 1,380
“Cyient is in a strong uptrend across the time frame, forming a series of higher tops and bottoms formation. Since the last couple of years, the price action has taken the shape of a "rounding bottom" formation, representing strong accumulation,” Rajesh Palviya, Vice President, Technical & Derivatives Research ay Axis Securities said.

However, any sustainable weekly close above Rs 1,300 levels may confirm this pattern, which may lead prices further upside towards Rs 1,280-1,380 levels, Palviya said.

“Rising volumes, along with price rises, signal increased participation. Currently, the stock is placed well above its 20, 50, 100, and 200-day SMA, reconfirming bullish sentiments. The daily, weekly, and monthly strength indicator RSI are in bullish mode, indicating rising strength on short to medium-term charts, this analyst said.

"With strong growth potential backed by robust deal wins and superior execution capabilities, we upgrade our recommendation on the stock to buy," a separate note from Axis Securities said.

Axis also values the stock at 16X FY25E P/E from an earlier valuation of 15X FY24E.

Stock broking company Dalal & Broacha recommends a buy in Cyient for a price target of Rs 1,363 19 estimating a 19% upside on the Friday closing price.

Another positive that goes with this stock is its relatively lower volatility. Cyient has traded with a 1-year beta of 0.62, Trendlyne data said. The stock is trading at a price-to-book value of 3.74.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)