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KPIT’s organic revenue growth of ~10% (US$ QoQ) was above
nearly a year, business from its our expectation. After falling for
top client-Cummins is surging (25% QoQ US$). Our interaction
demand from Cummins for both - with management indicates that
its engineering services and IT services - is accelerating. EBITDA
margins (-150bps QoQ), on the other hand, were impacted by
quarter specific factors - an appreciating currency and costs
related to acquisitions. Going forward, we see higher utilization
and synergies from acquisition as margin tailwinds. Also, we have
cut our estimates on ‘Revolo’ due to delays in testing and
only 5% of PAT in regulatory clearances. Its contribution is now
FY13. With a buoyant demand environment for its key engineering
and ERP services, resurgence in growth from its top-client and
improving margin levers, we are upgrading KPIT to a BUY.
Driven by an acceleration in growth from its top-client Cummins, KPIT •
of ~20% QoQ in 3QFY11 (organic delivered a robust revenue growth
revenue growth of 10% QoQ US$).
The 10%, almost entirely volume led growth was driven by a strong •
demand for its engineering and custom IT services.
EBITDA margins declined 150bps QoQ due to headwinds from an •
related costs and a higher bench. appreciating currency, acquisition
Attrition continued to be high at ~30% during 3QFY11. Consequently, •
while the need to increase lateral hiring was a margin headwind in
3QFY11, utilizations remain low at ~67.5% (offshore) and are a margin
tailwind gong forward.
olo’ is being delayed by nearly a Product launch of its innovative ‘Rev •
ing and regulation. Consequently, we year due to delays related to test
rlier ~12.5% eps contribution from have cut our estimates from our ea
Revolo in FY12/13 to 5% in FY13 and none in FY12.
Our interaction with management indicates an acceleration in demand •
and ERP services. Also, despite environment for its engineering
attrition worries, low utilization and integration synergies are likely
margin tailwinds going forward. We upgrade it to a BUY.
India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details �� ��
KPIT’s organic revenue growth of ~10% (US$ QoQ) was above
nearly a year, business from its our expectation. After falling for
top client-Cummins is surging (25% QoQ US$). Our interaction
demand from Cummins for both - with management indicates that
its engineering services and IT services - is accelerating. EBITDA
margins (-150bps QoQ), on the other hand, were impacted by
quarter specific factors - an appreciating currency and costs
related to acquisitions. Going forward, we see higher utilization
and synergies from acquisition as margin tailwinds. Also, we have
cut our estimates on ‘Revolo’ due to delays in testing and
only 5% of PAT in regulatory clearances. Its contribution is now
FY13. With a buoyant demand environment for its key engineering
and ERP services, resurgence in growth from its top-client and
improving margin levers, we are upgrading KPIT to a BUY.
Driven by an acceleration in growth from its top-client Cummins, KPIT •
of ~20% QoQ in 3QFY11 (organic delivered a robust revenue growth
revenue growth of 10% QoQ US$).
The 10%, almost entirely volume led growth was driven by a strong •
demand for its engineering and custom IT services.
EBITDA margins declined 150bps QoQ due to headwinds from an •
related costs and a higher bench. appreciating currency, acquisition
Attrition continued to be high at ~30% during 3QFY11. Consequently, •
while the need to increase lateral hiring was a margin headwind in
3QFY11, utilizations remain low at ~67.5% (offshore) and are a margin
tailwind gong forward.
olo’ is being delayed by nearly a Product launch of its innovative ‘Rev •
ing and regulation. Consequently, we year due to delays related to test
rlier ~12.5% eps contribution from have cut our estimates from our ea
Revolo in FY12/13 to 5% in FY13 and none in FY12.
Our interaction with management indicates an acceleration in demand •
and ERP services. Also, despite environment for its engineering
attrition worries, low utilization and integration synergies are likely
margin tailwinds going forward. We upgrade it to a BUY.
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