Cyient Limited Q4 FY23 Earnings Conference Call Insights

Key highlights from Cyient Limited (CYIENT) Q4 FY23 Earnings Concall

Q&A Highlights:

• [00:32:41] Philip Goela from Morgan Stanley inquired about the services business guidance range of 15-20%, potential project ramp-downs or client cancellations, margin goals for the upcoming year, and expectations for wage increases in the next year. Krishna Bodanapu MD said there is a cautiousness in the market, especially in some industries like semiconductor, medical, and sustainability. CYIENT has given a conservative guidance to manage its business and make sure that costs are under control.

• [00:33:32] Philip Goela of Morgan Stanley asked regarding margin aspirations for next year, have price increases from the second half of last year already been accounted for, or are there additional expected margin expansions. Krishna Bodanapu MD said CYIENT was optimistic about its portfolio mix and the growth of the verticals of sustainability, connectivity and transport in the upcoming year. However, the company remains cautious as there could be potential issues and delays that arise throughout the year.

• [00:36:44] Sandeep Shah at Equirus asked about the projected core services growth for FY24 guidance. Krishna Bodanapu MD replied that the company is not breaking down by core on consolidated, and it has arrived at a 15-20% range. CYIENT will try to narrow this range as it learns more about how things happened during the year.

• [00:37:53] Sandeep Shah of Equirus queried about the outlook for the railways in terms of QonQ growth recovery and potential double-digit growth in FY24. Krishna Bodanapu MD said CYIENT has turned the corner in 4Q and is expecting double-digit growth for the transport segment for the year.

• [00:38:11] Sandeep Shah of Equirus also asked when can rate hikes be expected in FY24. Krishna Bodanapu MD clarified that the company has not quantified the wage hikes yet, but it will be similar to what CYIENT did last year.

• [00:41:53] Shradha Agarwal from Amsec asked about the outlook for aerospace business in FY24 given the strong performance in 4Q. Krishna Bodanapu MD answered that CYIENT expects the aerospace industry to continue to grow in double digits this year, and CYIENT is helping customers with digital and technology solutions. CYIENT also expects a platform upgrade to be announced in the next 3 years, which will drive new products and require significant capital investment.

• [00:50:04] Nitin Sharma from MCPro Research asked what kind of headcount addition CYIENT is looking at in FY24. Ajay Aggarwal CFO answered that CYIENT have added 500 people in anticipation of growth and decreased utilization by 3.5%. Utilization and incumbency are the levers used to drive growth in 1H24.

• [00:51:16] Nitin Sharma from MCPro Research enquired if CYIENT is comfortable with the current level of utilization. Ajay Aggarwal CFO said CYIENT is comfortable with its utilization level, and have made changes to its structure and upskilling/reskilling program to help drive the right levels of utilization.