1. 1
Information Technology
Cyient Ltd.
Cyient Ltd today announced the acquisition of Global Services Engineering Asia (GSE-Asia), based in Singapore, from Pratt &
Whitney Pte Ltd. This site provides repairs, development and validation for aero gas turbine engine components in support
of Pratt & Whitney through the region. GSE-Asia has revenue of $10-12mn with EBIDTA margin of 12-14%. Cyient paid ~$6-7mn
(0.6x revenue) for the acquisition. This is Cyient's fourth acquisition is last 15 months.
Why this acquisition?
As the company has been maintaining that opportunities in its
core competency area of designing is getting reduced with most
engine programs coming to an end and no new engine program
taking off, only way to grow its aerospace segment, which
contributes ~36% of its revenue, is to expand its presence in
manufacturing (acquired Rangsons Electronics) and aftermarket
services like MRO. This acquisition also opens large market
opportunity as aftermarket constitutes ~35% of spend across
value chain compared to 15% in design related spend. With the
acquisition of GSE-Asia, Cyient has established itself as a Design-
Build-Maintain partner around Engines, Structures and Avionics
& Systems. It also consolidates engineering operations with
strategic partner like P&W.
Strategic fit
• Aligns with Cyient's Aerospace Strategy to grow aftermarket
services
• Experience in repair engineering provides confidence in
delivering value to customers (~20% of the aerospace revenues
comes from MRO)
• Strengthening existing Pratt & Whitney relationship
• The business will see additional growth from new clients in
the Aerospace industry and offshoring to India over medium
to long terms
Shareholding (%) Jun-15
Promoters 22.21
FIIs 53.74
DIIs 13.62
Others 10.43
Relative Price Performance
July 22, 2015 EVENTUPDATE
Key Data
BSE Code 532175
NSE Code CYIENT
Bloomberg Code INFTC IN
Reuters Code INFE.BO
Shares Outstanding (mn) 112.44
Face Value 5
Mcap (INR bn) 60
52 Week H/L 613/327
2W Avg. Qty.NSE 111613
Free Float (INR Bn) 47
Beta 0.61
Y/E March (INR mn) FY14 FY15 FY16E FY17E
Net Sales 22064 27359 33484 38833
Growth (%) 17.80% 24.00% 22.39% 15.97%
EBIDTAM (%) 18.58% 14.67% 15.56% 13.98%
Adj. PAT 2663 3534 4285 4470
Growth (%) 14.34% 32.68% 21.26% 4.33%
Adj. EPS (INR) 22.16 31.45 38.13 39.78
P/E(x) 13.76 15.58 14.03 13.45
EV/EBIDTA 6.83 9.48 8.45 7.63
EV/Sales 1.33 1.82 1.57 1.29
RoACE (%) 24.46 25.35 25.79 23.84
RoAE (%) 18.28 20.59 21.37 19.18
Sensex: 28446 CMP: INR 535 Target: INR 565
Access to new market
• Singapore is home to many Aerospace companies (MRO, R&D,
manufacturing, data analytics)
• Potential to expand services to other aerospace companies in
Singapore and APAC
Transactiondetails
• Asset Purchase Transaction
• Transfer of ~90 employees
• P&W to give committed volume for a period of 4 years
• Deal to be financed by 1:1 Debt Equity for cost arbitrage and
leveraging
• Revenue of $10 Mn-$12Mn and EBITDA margin of 12-14%
• Acquisition is EPS accretive and improves Return on Equity
Outlook & Valuation
The recent acquisition of MRO engineering division of P&W,
Singapore is in line with the company's vision of becoming a
$1bn company by 2020 and to start with, it is leveraging its balance
sheet strength which has cash of INR 6614mn ($104mn) at the
end of Q1FY16. This acquisition is also in line with company's
strategy of focusing on improving RoE rather than improving
margins. On full year basis, this deal will add INR 0.5 to EPS and
improve the RoE by ~20bps. We maintain our HOLD rating on the
stock with TP of INR565.
Deepak Tewary
deepak.tewary@spagroupindia.com
Ph. No. 91 33 40114800/ 859
80
100
120
140
160
180
200
Jul-14
Aug-14
Sep-14
Oct-14
Nov-14
Dec-14
Jan-15
Feb-15
Mar-15
Apr-15
May-15
Jun-15
Jul-15
Cyient Sensex

2. 2
Information Technology
Why GSE-Asia fits strategy execution
Cyient's industry strategy for Aerospace & Defense is to position
Cyient as a Design-Build-Maintain partner around Engines,
Structures and Avionics & Systems. Strategy Execution includes
investing in Engine overhaul & repair capabilities
Product Realization
Rangsons
acquisition
provides design led
manufacturing
capability
Aftermarket
Services
GSE-Asia extends
Cyient's value
through MRO
support
Positions Cyient as a "concept to solution" partner addressing
customers needs across value chain
Source:Company
Source:Company, SPA Research
Source:Company, SPA Research
Global fleet to grow at CAGR of ~3.5%
MRO spend at $76bn to grow to $100bn by 2025
growing at CAGR of ~4%
Engineering
Cyient has 15+
years track record
in aerospace
industry,
acknowledge
leader in design
services

3. 3
Information Technology
Financials
Income StatementY
Y/E March (INR mn) FY14 FY15 FY16E FY17E
Net Sales 22064 27359 33484 38833
% Growth 17.80% 24.00% 22.39% 15.97%
COGS 12756 17129 21249 25193
% Growth - 34.28% 24.05% 18.56%
SG&A 5208 6217 7026 8209
% Growth - 19.38% 13.02% 16.83%
Total Op Exp 17964 23346 28275 33402
EBIDTA (excl OI) 4100 4014 5209 5431
% Growth 20.05% -2.11% 29.79% 4.25%
EBITDA Margin % 18.58% 14.67% 15.56% 13.98%
Dep./Amortization 720 713 746 790
EBIT 3380 3301 4463 4641
EBIT Margin % 15.32% 12.06% 13.33% 11.95%
Interest Expense 29 80 105 64
Other Income 187 1236 1024 1139
Exceptionals 0 0 0 0
EBT 3538 4457 5382 5716
Tax Expenses 1030 1096 1347 1543
PAT 2508 3361 4034 4173
Minority Interest 0 -22 -37 -47
Share of Profit 152 150 213 250
APAT 2660 3534 4285 4470
% Growth 15.13% 32.84% 21.26% 4.33%
APAT Margin % 12.06% 12.92% 12.80% 11.51%
Balance Sheet
Y/E March (INR mn) FY14 FY15 FY16E FY17E
Share Capital 560 562 562 562
Reserves and Surplus 15325 17879 21106 24385
Total Networth 15885 18441 21667 24947
Minority Interest 0 122 37 47
Secured 58 1280 1000 800
Unsecured 0 0 0 0
Total Debt 58.2 1279.7 1000.0 800.0
Net Deferred Tax Liability 22 12 12 12
Other Liabilities 0 0 0 0
Sources of Funds 15921 19831 22693 25782
Net Block 3437 7981 7967 8033
Investments 925 1012 1192 1372
Current Assets 15118 16728 19413 23287
Current Liabilities 3559 5890 5879 6910
Net Current Assets 11559 10838 13534 16377
Misc. Expenditure 0 0 0 0
Deferred Tax Assets 0 0 0 0
Other Assets 0 0 0 0
Application of Funds 15921 19831 22693 25782
Cash Flow
Y/E March (INR mn) FY14 FY15 FY16E FY17E
EBT 3538 4457 5382 5716
Add:Depreciation 720 713 746 790
Add: Interest paid 29 80 105 64
Direct taxes paid 1030 1096 1347 1543
Change in Working Capital -412 37 -1236 -697
Others 189 385 176 204
Cash Flow from operations (a) 3034 4575 3826 4533
Change in Fixed Assets -575 -5258 -732 -856
Change in CWIP 0 0 0 0
Change in Investments 57 -86 -180 -180
Cash Flow from Investing (b) -517 -5344 -913 -1036
Change in Equity 2 2 0 0
Debt Raised/(Repaid) 58 1222 -280 -200
Dividend paid -560 -1058 -1058 -1190
Interest paid -29 -80 -105 -64
Cash Flow from Financing (c ) -589 85 -1442 -1454
Net Change in Cash (a+b+c) 1928 -683 1471 2043
Opening Cash 4984 6912 6228 7699
Closing Cash 6912 6228 7699 9742
Key Ratios
Y/E FY14 FY15 FY16E FY17E
Per Share Data (INR)
Reported EPS 23.76 31.45 38.13 39.78
Adj. EPS 23.76 31.45 38.13 39.78
Growth (%) 14.75% 32.37% 21.26% 4.33%
CEPS 30.19 37.79 44.77 46.81
DPS 5.00 8.00 8.00 9.00
BVPS 141.87 164.12 192.84 222.03
Return Ratios (%)
RoACE 24.46 25.35 25.79 23.84
RoANW 18.28 20.59 21.37 19.18
RoIC 15.86 17.24 18.12 16.36
Liquidity Ratios
Net Debt/Equity 0 0 0 0
Interest Coverage Ratio 121.75 56.71 52.35 90.32
Current Ratio 4.25 2.84 3.30 3.37
Quick Ratio 4.25 2.74 3.30 3.37
Efficiency Ratios
Asset Turnover Ratio 0.72 0.73 0.68 0.66
Inventory Days 0 0 0 0
Debtor Days 79 71 71 71
Creditor Days 50 68 68 68
Valuation Ratios
P/E(x) 13.76 15.58 14.03 13.45
P/BV (x) 2.30 2.99 2.77 2.41
P/CEPS (x) 10.83 12.96 11.95 11.43
Dividend Yield (%) 1.53 1.63 1.50 1.68
EV/Net Sales (x) 1.33 1.82 1.57 1.29
EV/EBIDTA(x) 6.83 9.48 8.45 7.63

4. 4
Information Technology
For More Information Visit Us At : www.spasecurities.com
Sharad Avasthi Head - Equity Research sharad.avasthi@spagroupindia.com Tel.: +91-33-4011 4800 Ext.832
SPA Securities Ltd: Mittal Court, A-Wing, 10th Floor, Nariman Point, Mumbai - 400 021, Tel. No. : +91-022-4289 5600, Fax: +91 (22) 2657 3708/9
Analyst Certification of Independence: The analyst(s) for this report certifies that all the views expressed in this report accurately reflect his or her personal views about the subject company(ies) or issuers and no part of his or
hercompensationwas,isorwillbe,directlyorindirectlyrelatedtospecificrecommendationsorviewsexpressedinthisreport.Theresearchanalystsareboundbystringentinternalregulationsandalsolegalandstatutoryrequirements
of the Securities and Exchange Board of India (hereinafter "SEBI") and the analysts' compensation are completely delinked from all the other companies and/or entities of SPASecurities Limited, and have no bearing whatsoever on
anyrecommendationthattheyhavegivenintheResearchReport.
DisclaimerandDisclosuresasrequiredunderSEBI(Research Analyst)Regulations,2014:SPASecuritiesLimited(hereinafterreferasSPASecurities)anditsaffiliatesareengagedininvestmentbanking,investment advisory,
stock broking, institutional equities, Mutual Fund Distributor and insurance broking. SPASecurities is a SEBI registered securities broking Company having membership of NSE, BSE & MCX for Equity, Future & Option, Currency
Derivatives segment and Wholesale Debt Market. The Company is focused primarily on providing securities broking services to institutional clients and is empanelled as an approved securities broker with all the major Nationalised,
PrivateandCo-operativebanks,Corporatehouses,InsuranceCompanies,FinancialInstitutions,AssetManagementCompaniesandProvidentFundTrusts.Detailsofaffiliatesareavailableonourwebsitei.e.www.spasecurities.com.
Weherebydeclarethatouractivitieswereneithersuspendednorwehavedefaultedwithanystockexchangeauthoritywithwhom weareregisteredinthelastfiveyears.WehavenotbeendebarredfromdoingbusinessbyanyStock
Exchange/SEBI or any other authorities, nor has our certificate of registration been cancelled by SEBI at any point of time.
GeneralDisclosures: ThisResearchReport(hereinaftercalled"report")hasbeenpreparedbySPASecuritiesandismeantforsoleusebytherecipientandnotforcirculation.ThisReportdoesnotconstituteapersonalrecommendation
or take into account the particular investment objectives, financial situations, or needs of individual clients. The recommendations, if any, made herein are expression of views and/or opinions and should not be deemed or construed
tobeneitheradviceforthepurposeofpurchaseorsaleofanysecurity,(asdefinedundersection2(h)ofsecuritiesContracts(Regulation)Act.1956,throughSPASecuritiesnoranysolicitationorofferingofanyinvestment/tradingopportunity
onbehalfoftheissuer(s)oftherespectivesecurity(ies)referredtoherein.RecipientsofthisReportshouldrelyoninformation/dataarisingoutoftheirowninvestigations.Readersareadvisedtoseekindependentprofessionaladvice
and arrive at an informed trading/investment decision before executing any trades or making any investments.
ThisReporthasbeenpreparedonthebasisofpubliclyavailableinformation,internallydevelopeddataandothersourcesbelievedbySPASecuritiestobereliable,althoughitsaccuracyandcompletenesscannotbeguaranteed.Such
information has not been independently verified and no guaranty, representation of warranty, express or implied, is made as to its accuracy, completeness or correctness.Any review, retransmission or any other use is prohibited.
The information, opinions, views expressed in this Research Report are those of the research analyst as at the date of this Research Report which are subject to change and do not represent to be an authority on the subject. While
we would endeavour to update the information herein on a reasonable basis, we are under no obligation to update the information.Also, there may be regulatory, compliance or other reasons that prevent us from doing so. Hence all
such information and opinions are subject to change without notice.
Our salespeople, traders, and other professionals may provide oral or written market commentary or trading strategies to our clients that reflect opinions that are contrary to the opinions expressed herein, and our proprietary trading
and investing businesses may make investment decisions that may be inconsistent with the recommendations expressed herein.
This Research Report should be read and relied upon at the sole discretion and risk of the recipient. If you are dissatisfied with the contents of this complimentary Research Report or with the terms of this Disclaimer, your sole and
exclusive remedy is to stop using this Research Report. Neither SPASecurities nor its affiliates or their respective directors, employees, agents or representatives shall be responsible or liable in any manner, directly or indirectly, for
the losses or the damages sustained due to the investments made or any action taken on basis of this report, including but not restricted to, fluctuation in the prices of shares and bonds, changes in the currency rates, diminution in
the NAVs, reduction in the dividend or income, etc.
Compensation of our ResearchAnalysts is not based on any specific merchant banking, investment banking or brokerage service transactions. SPASecurities may have issued other reports in the past that are inconsistent with and
reachdifferentconclusionfromtheinformationpresentedinthisreport.
SPASecurities, its affiliates and employees may, from time to time, effect or have effected an own account transaction in, or deal as principal or agent in or for the securities mentioned in this document.They may perform or seek to
perform investment banking or other services for, or solicit investment banking or other business from, any company referred to in this report.
TheusershouldconsulttheirownadvisorstodeterminethemeritsandrisksofinvestmentandalsoreadtheRiskDisclosureDocumentsforCapitalMarketsandDerivativeSegmentsasprescribedbySecuritiesandExchangeBoard
of India before investing in the Indian Markets.
A graph of daily closing prices of securities is available at www.nseindia.com and http://economictimes.indiatimes.com/markets/stocks/stock-quotes. (Choose a company from the list on the browser and select the "three years" icon
in the price chart).
SPASecurities plans to register itself as a Research Entity under the SEBI (ResearchAnalysts) Regulations, 2014.
Disclaimers in respect of jurisdiction: This report is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident or located in any locality, state, country or other jurisdiction where such
distribution, publication, reproduction, availability or use would be contrary to law or regulation or what would subject SPASecurities or its affiliates to any registration or licensing requirement within such jurisdiction. If this report is
inadvertentlysendorhasreachedanyindividualinsuchcountry,especially,USA,thesamemaybeignoredandbroughttotheattentionofthesender.Thisdocumentmaynotbereproduced,distributedorpublishedforanypurposes
without prior written approval of SPASecurities.
List of Associates as per SEBI (Research Analyst) Regulations, 2014
• SPAInsurance Broking Services limited
Statements on ownership and material conflicts of interest, compensation - SPA and Associates
Disclosure of interest statement Yes/No
SPA Securities/its Affiliates/Analyst/his or her Relative financial interest in the company No
SPA Securities/its Affiliates/Analyst/his or her Relative actual/beneficial ownership of more than 1% in subject company at the end of the month
Immediately preceding the date of the publication of the research report or date of public appearance. No
Investment banking relationship with the company covered No
Any other material conflict of interest at the time of publishing the research report No
Receipt of compensation by SPA Securities or its Affiliated Companies from the subject company covered for in the last twelve months:
• Managing/co-managing public offering of securities
• Investmentbanking/merchantbanking/brokerageservices
• products or services other than those above
• in connection with research report
No
Whether Research Analyst has served as an officer, director or employee of the subject company covered No
Whether the Research Analyst or Research Entity has been engaged in market making activity of the Subject Company; No
For statements on ownership and material conflicts of interest, compensation, etc. for individual Research Analyst(s), please refer to each specific research report.
SPA CAPITAL SERVICES LIMITED
Investment Advisory Services,
AMFI Reg. No. ARN-0007
SPA CAPITAL ADVISORS LIMITED
SEBI registered Category-1
Merchant Bankers
SEBI Regn. No. INM000010825
SPA COMTRADE PRIVATE LIMITED
Member of NCDEX & MCX.
NCDEX TMID-00729,
NCDEXFMCNo.NCDEX/TCM/CORP/0714
SPAINSURANCE BROKING SERVICES LTD
Direct Broker for Life and General
Insurance Broking
IRDA Lic. Code No. DB053/03
SPA Securities Ltd SEBI Reg. Nos.
NSE Cash INB231178238
NSE Future & Option INF231173238
NSE Currency Derivatives INE231178238
BSE Cash INB011178234
BSE Currency Derivatives INE011178234
MCX-SX Cash INB261178231
MCX-SX Future & Option INF261178231
MCX-SX Currency Derivatives INE261178238
Mutual Fund ARN 77388
CDSLDP IN-DP-CDSL-485-2008
NSDLDP IN-DP-NSDL-316-2009