Cyient’s shares fell 22.8% on Friday reacting to the resignation of the IT company’s chief executive Karthikeyan Natarajan and the adjustment of the company’s revenue and growth expectations following the third-quarter earnings.
Still, with the top executive’s departure potentially out in the field, Cyient’s near-term outlook has emerged as worrisome and analysts do not dismiss further downslide in the stock.
Based on what happened earlier in the day, the sell-off shaved almost a quarter of the company’s market value in the stock. It closed at ₹1,355 on Friday.
“The main reason for the day’s loss was the downgrade in growth outlook provided by management different from the rest of its IT counterparts”, stated Sagar Shetty, Analysts of Stoxbox.
Of its peers in the Sensex, Tata Technologies dropped by 2.3%, while KPIT Technologies shed 2.15%, and L&T Technologies declined by a more moderate 0.42%. Mphais’s stock rose by 3.2%, while Persistent Systems and Coforge were up by 1.6% and 0.36%, respectively.
Motilal Oswal Financial Services downgraded it to ‘Sell’ with a new target price of ₹1,350 because there is short-term revenue uncertainty following the current deceleration and Karthikeyan’s resignations.
”We downgrade the stock to sell as we predict that lower revenues in the current quarter 4 and seasonally low H1 will reduce the revenue growth rate for FY26E while the margins could also decline in a similar manner”, Motilal Oswal said.
Emkay Global brokerage said poor operating performance, low growth visibility in the near term, and the unexpected departure of the chief executive would negatively impact the performance of its stock. The brokerage downgraded it to ‘Reduce’ and cut the target price to ₹1,700.
Cyient had a poor performance in 2024 as the share prices dropped to 4,190, far below the 4,780 of the BSE 500 INDEX, which only increased by 14.5%, while Cyient lost almost 20%.
Shetty believes there is more downside: Shares took a hit after the uncertain outlook on earnings and after analyst downgrades.