Q3-FY11 earnings updates on KPIT Cummins Infosystems Ltd.:: Keynote

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 Q3-FY11 earnings updates on KPIT Cummins Infosystems Ltd.

KPIT Cummins Infosystems Ltd. (KPIT ) reported a robust 19% q-o-q $-growth. This can be further broken-down into ~9% In2Soft and CPG contribution and ~10% organic realization.   Overall, the business has shown broad based growth across verticals and SBUs. The hiring schedule (~4.6% net additions) adds further confidence in the demand scenario.

On the other hand, KPIT witnessed EBITDA margin contraction of 142bps q-o-q. This can be attributed to low forex realizations (-2.1% q-o-q) and other on-site costs incl. integration and other administrative expenses related to the recent acquisitions of In2Soft and CPG. Utilisation has remained relatively stable with blended rates rising by ~16bps q-o-q.

Lending further support to our view has been the performance registered by Cummins account, growing at a whopping q-o-q growth rate of 22%.

Other notable events during Q3FY11incl. equity infusion of ~`112.5Cr through QIP to ChrysCapital. Though the company does not have cash constraints related to normal, day-to-day operations, the amount raised may be utilized towards outstanding acquisition-considerations, namely, the Sparta and CPG deals with significant in-built performance-based kickers. The above capital may also be used for inorganic activity in near-future.

Revolo is expected to be on track. Management has announced two product variants, one each for the CV and passenger car segment