Information technology (IT) services company Cyient announced on Tuesday, August 20, that its board approved the sale of a 14.5 per cent stake in its subsidiary Cyient DLM Ltd through a block deal. Cyient plans to close the stake sale of its subsidiary, Cyient DLM, on August 21, 2024.
“The Board of Directors of the company, at its meeting held today, August 20, 2024, has considered and approved the sale of up to 1.14 crore equity shares i.e. approximately 14.5 per cent of the total outstanding equity shareholding of its subsidiary, Cyient DLM Ltd, by way of a share sale utilising the block deal window mechanism provided by the stock exchanges,” said Cyient in a regulatory filing to the stock exchanges.
“The expected date for completion of the sale/ closing is August 21, 2024, or such date as mutually agreed between the company and the buyer,” added Cyient. The IT services firm said it will use the proceeds for capital requirements and debt retirement.
Cyient reported a drop in first-quarter profit, hurt by a greater-than-expected delay in project execution. The company reported a 0.6 per cent revenue decline due to challenges in the railway industry and its connectivity segment. Tech firms have grappled with sluggish demand through the last fiscal year as clients focused on cutting costs in the face of high inflation and interest rates.
Cyient’s management cut its FY25 DET (digital, engineering, and technology) revenue growth guidance sharply to flat YoY from high single-digit growth.The cut in guidance came on the back of a delay in project ramp-up in telecom and continued weakness in the railway business.
“We had a challenging Q1, however we remain confident that with our balanced portfolio and investment in technology solutions, we will achieve growth in the mid-to-long term to deliver value to stakeholders,” said Karthikeyan Natarajan, executive director and chief executive officer, Cyient.
The management also stated that it is eyeing flat DET revenue growth for FY25 in constant currency terms due to the Q1 FY25 impact. However, they were optimistic about a turnaround in the second half of the current fiscal.
However, companies in the technology sector earn a significant share of revenue from the US and benefit from increased client spending due to likely interest rate cuts in the world’s biggest economy later this year, according to analysts. On Tuesday, shares of Cyient settled 6.13 per cent higher at ₹1,934.05 apiece on the BSE.
