Cyient’s shares took a heavy beating on Friday, January 24, 2025, falling over 18.58% due to a combination of disappointing developments. Weak quarterly results, downward revision in growth expectations, and an unexpected leadership change left investors reeling.
What led to the slump?
Cyient’s Q3 FY25 performance fell short of expectations, with net profit dropping 31.56% to ₹127.7 crore compared to ₹186.6 crore in the previous quarter. Revenue growth remained nearly flat, rising just 0.5% to ₹1,909.8 crore. These lacklustre results weighed heavily on investor sentiment.
The company further dampened market confidence by slashing its FY25 revenue growth guidance to a decline of 2.7%. This marked a significant downgrade from the earlier expectation of flat growth and a stark contrast to the high single-digit growth target set at the start of the year. The downward revision has raised concerns about the company’s ability to drive growth, not just this year but also in FY26.
Adding to the uncertainty, Cyient’s CEO, Karthikeyan Natarajan, resigned from his position. In the interim, the company’s promoter, Krishna Bodanapu, has stepped in to lead. While this ensures continuity for now, the unexpected leadership change has left many investors uneasy.
Impact on share market investment
Analysts have lowered earnings estimates for FY25 and FY26, citing weaker growth prospects and pressure on margins. Target prices for the stock have also been revised downwards, reflecting the challenges the company faces.
For those considering share market investment, Cyient’s current valuation may seem tempting. However, the risks tied to its downgraded outlook and leadership transition make it a cautious choice. It’s essential to closely monitor how the company navigates these challenges in the coming quarters.
What lies ahead?
As of Friday, January 24, 2025, at 11:39 AM, these developments have triggered substantial sell-offs, with Cyient’s stock trading with a 20% drop at ₹1,404.15. Cyient’s leadership must work swiftly to address investor concerns and rebuild market confidence. Transparency, clear communication, and a solid plan for growth will be key. For now, a patient and cautious approach may be the wisest strategy for investors as the company tackles these headwinds.