Promoter Cyient Ltd on Wednesday sold part stake in its listed subsidiary Cyient DLM through a bulk deal. According to exchange data, Cyient has offloaded about 1.14 crore shares or 14.5% stake in the company.
The deal is worth Rs. 764.4 was made in , valued at Rs. 879 crores.
Marquee funds including Morgan Stanley, HDFC Mutual Fund, Edelweiss MF, Nippon India MF, Citigroup participated in the deal.
As of June 2024, Cyient as promoter holds about 66.66% stake in the company. The remaining 33.34% is held by public shareholders.
Among public holdings, mutual funds hold about 17%, while foreign portfolio investors hold 4.88% in Scient DLM.
Scient said the proceeds from the stake sale will be used to invest in the semiconductor business and repay debt. The company hopes to expand its addressable market offering turnkey assets to clients in the medical, industrial and telecom industries.
So far this year, shares of Cyient have underperformed with a negative 13% return, while shares of Cyient DLM have seen a steady growth of 15% year-on-year.
Brokerage Kotak Securities believes that the opportunity to invest in Scient looks attractive, though there are some risks.
“Success boils down to the ability to leverage IP to reduce choice of applications and custom chip design timelines. Buy and hold at an unchanged fair price of Rs 2,050,” it said in a report.
JP Morgan also paid Rs. maintained an overweight rating on the stock with a target price of 2,100 and said it does not expect the promoter holding in DML to fall below 51%.
Cient recently established a wholly-owned subsidiary to focus on turnkey application-specific integrated circuit (ASIC) design and chip sales through fabless models for analog mixed-signal chips.
“The business has high working capital requirements, with end-to-end responsibility being taken by Cyient and revenue recognition on the sale of chips to customers. The architecture development and design phase will have significantly higher margins than the fab part of the alliance,” Kotak said.
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