Cyient posts strong results for Q2, sales hit record high, up 6.7%

Mid-sized IT services provider Cyient reported revenue growth of 6.7% on quarter to $150.1, an increase of 10.0% on year.

Out of this, services revenue accounted for $134.3 Mn, up 4.2% on quarter and 9.2% on year.

Operating profit jumped 21.5% on quarter to Rs 21.41 bln.

Earnings grew 26.9%to at 21.11 bln.

“Q2 FY18 was in line with our expectations both on revenue and margin,” said Krishna Bodanapu, Managing Director and Chief Executive Officer.

“The growth in our services business was driven by Communications, Transportation and Aerospace & Defense business units.

“The Design Led Manufacturing (DLM) business continues to improve in performance and delivered double digit growth YoY. Our operating margin for the quarter stood at 14.6%, an increase of 56 bps YoY & 181 bps QoQ.”

He said the 163 basis point sequential increase in operating profit margin at the services business — to 16.2% — was due to improvements in operational efficiencies.

He said the outlook for FY18 is strong, backed by a strong pipeline and order backlog.

“We expect a double digit growth in our services business while DLM business is expected to grow around 20%. Our margins are expected to improve by 5O bps driven by improvements in operational efficiency through the year. We expect to deliver a double digit earnings growth in the year.”

Mr. Ajay Aggarwal, Chief Financial Officer, said the year is shaping well towards profitability.

“The focus on operating profit has showed up wellon operating profit growth and operating margin expansion,” he said.

Cyient had a cash balance of $150.1 Mn.

“We continue to act on investor feedback and have increased our dividend payout from 30% to 40%,” he said, adding the company will continue to focus on organic and inorganic strategic investments.

“We expect this momentum to continue in FY18. Cyient will continue to focus on growth, improvement in operating margin, cash generation and thus maximizing well rounded focus on the value for our shareholders.”

The Aerospace & Defense BU witnessed a growth of 3.0% YoY and 2.9% QoQ. Growth was predominantly driven by growth in key engagements specifically in Manufacturing and Aftermarket, the company said.