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Domestic brokerage and research firm Motilal Oswal is bullish on Cyient and sees further upside on the IT stock despite its 125% this year (year-to-date or YTD) so far. High growth visibility, coupled with margin expansion over the medium term, should bring good earnings visibility, said the brokerage.

IT company Cyient on Thursday posted a 44.5% jump in consolidated net profit to 121 crore for the quarter ended on September 30, 2021, compared to 83.9 crore in the same period a year ago. Its revenue grew 4.6% on a sequential basis in dollar terms.

“We increase our EPS estimate for FY23 on a potentially better margin performance, led by the management’s medium-term outlook. We maintain our Buy rating on attractive valuations," Motilal Oswal said in a note. It has a target price of 1,380 per share.

The brokerage continues to see a strong rebound in Cyient's ER&D spending, led by increasing outsourcing and larger deal sizes. “The management strategy to leverage these spends – led by a refreshed GTM strategy and increased focus on large deal wins–should dwell well with its growth performance. We expect Cyient (CYL) to deliver a 14% USD revenue CAGR over FY21–23E," it added.

The management continues to expect double-digit growth in the Servicesbusiness in FY22, with growth continuing in 3Q.

“Growth momentum in verticals such as Communications, Utilities, Semi-conductor, Automotive, Medical Devices, and Mining is expected to continue forthe next 2–3 years. Aerospace is expected to bounce back to pre-COVID levels in FY23," Motilal note added.

The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.

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