KPIT Technologies Ltd - Inline Results, Outlook Positive; Result Update Q3FY15 :: Edelweiss, report

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KPIT Technologies - Turning constructive after long… :: ICICI Securities

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KPIT Technologies Limited| Q3FY15 Result Update | Below expectation performance; Downgraded to HOLD with reduction in TP of Rs.178 from Rs.190… IndiaNivesh

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KPIT - Steady margin improvement :: HDFC Securities

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Silver lining visible - KPIT:: HDFC Securities

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Technicals: Wipro, DQ Entertainment, L & T Finance, IFCI, KPIT Tech ::Business Line

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Rerating necessitates consistent performance • KPIT:: ICICI Securities PDF link

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KPIT Technologies Ltd.|Q2FY15 Result Update | Above expectation performance; Revival in Top account: Maintain BUY ::IndiaNivesh

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KPIT Technologies Ltd - All Set To Soar; Result Update Q2FY15 :: Edelweiss, PDF link

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Technicals-Jindal Saw, JSW Energy, GVK, KPIT , CESC, Castrol, Unitech :: Business Line

KPIT Cummins Good Quarter, maintains annual guidance; Reiterate Hold:: Sunidhi

KPIT’s Q2FY13 revenue at US$103.4 mn was up 5.5% QoQ, higher than our
estimate. On lower-than-expected SG&A costs, operating margin increased
157bps QoQ to 16.7%. Forex loss of `213mn marred PAT for Q2FY13. Volume
growth for Onsite was ~9% and offshore was ~3% (blended ~4%).We maintain
our HOLD rating on the stock with a Target Price of `140 on account of recent
deal wins providing visibility and KPIT maintaining its FY13 US$ revenue
guidance (31-34% growth), focus on profitability and broad-based growth.

ICICIdirect:: KPITCummins_Management Meet Update

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Angel Broking - KPIT Cummins - RU4QFY2012 - Result Updates :PDF Link

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KPIT Cummins - RU4QFY2012

KPIT Cummins: Buy ::Business Line

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Mid-tier IT services player KPIT Cummins Infosystems (KPIT) has been able to strongly tap into the revival in outsourcing from 2010, post the financial meltdown. Despite focussing on limited segments, the company is among the select set of mid-tier players to have matched the growth rates of most top-tier players in revenues in FY11 and even outpace them in FY12. Robust traction in its key vertical comprising three segments — automotive, transportation and manufacturing — expansion in the contribution of top clients and healthy large-deals pipeline are key positives for the company.

At Rs 163, the KPIT trades at nine times its likely per share earnings for FY13. This is at a discount to peers such as Infotech Enterprises and presents a reasonable entry point for investors with a two-year horizon.

In terms of its service-mix too, revenues from high-margin services such as SAP implementation have increased, and key markets, including the US and Europe, remain healthy. In the first nine months of this fiscal, KPIT witnessed a 51.5 per cent increase in revenues to Rs 1044.1 crore over the same period in FY11, while net profits rose 48.9 per cent to Rs 101.6 crore. The company has increased its revenue guidance for the current fiscal by about $10 million to $303 million, up 44 per cent increase over FY11.

KEY SEGMENTS EXPAND

KPIT has seen its key ATM vertical (automotive, transport and manufacturing) which accounts for over 70 percent of its revenues continue to grow at a rate faster than the company's revenue growth rate . Manufacturing as a vertical has been growing at a healthy pace for Infosys, HCL Technologies and TCS as well. This indicates a large potential market. It has also managed to sustain in a scenario where large customers undertook a vendor rationalisation exercise. With increased investments in ‘electronics' in cars, automotive too is set to deliver higher revenues for players such as KPIT . The company is among the largest third party vendors in India in auto-embedded electronics.

KPIT acquired a SAP implementation company SYSTIME in late 2010, which has increased the scope of its offering to customers, especially large ones. It has enabled the company to win some $10-million plus deals (rare earlier) in the manufacturing and automotive industries.

DEAL PIPELINE

The company has seen its top client, Cummins, and 10 other top customers grow at 38.2 per cent and 32 per cent respectively. This indicates KPIT's execution and client mining capabilities.

KPIT had signed three large deals worth $100 million in the September quarter, which ensures revenue visibility and adds to annuity-based revenues. These apart, the number of $1 million customers has increased from 40 in December 2010 to 54 now.

Utilisation rates, which reflects volumes (person-months billed) growth, is up for the company. From mid-60 per cent levels earlier, offshore utilisation is up to over nearly 72 per cent now . Onsite utilisation rates too continue to rise.

RISKS

Attrition, though falling, is still at a relatively high 17 per cent. Any wage hikes to stem this may hurt margins. KPIT derives nearly 48 percent of its revenues from onsite delivery, which are high cost in nature, and is steadily rising. These will have to managed well to optimise costs.

KPIT Cummins: Volumes grow, Pricing marginally higher :: Nirmal Bang

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The company reported good set of numbers and has revised guidance upwards for FY12E. For Q3FY12E, Dollar Revenues moved up 4.3% q-o-q, Rupee revenues climbed up 16.6% q-o-q and EBIDTA stretched 166 bps q-o-q.

Revenues advanced - Volumes grow, Pricing marginally higher

Revenues in $ terms grew 4.3% q-o-q, 21.6% y-o-y at $73.4 mn. This was supported by 4% volume growth q-o-q and Price improvement of 70-80 bps. In Rupee terms, revenues grew by 16.6% q-o-q, 38.4% y-o-y at Rs.378.9 crores. The Top Client ‘Cummins’ contributed 24% of the revenues, while the contribution from the Top 10 clients has gone down by 2.7% q-o-q.

EBIDTA margins - not a reflection of top line growth

EBIDTA margins expanded 166 bps q-o-q at 15.3%. The onsite revenues expanded (SAP business where margins are comparatively lower) 84 bps q-o-q and kept the margins subdued as against the  robust top line growth. SAP business contributed 33.35% to the total revenues, increase by 274 bps q-o-q. Company continues to hold a strong order book position in this business.

Profits aided by forex gain

Net Profits rose by 21.7% q-o-q at Rs41.1 crs maintaining the margins at 11%. The company made forex gains of Rs.9.8 crores during the quarter.

Revision in Guidance

The company has upped its guidance for the full year i.e. FY12 from range of $275 mn - $285 mn given previously to $289 mn - $291 mn (excluding revenue from SYSTIME). It implies that the  management expects revenue growth in the range of 2.3%-5% (in USD terms) in Q4FY12.

SYSTIME’s financials will be consolidated from Q4FY12E and will contribute around $13 mn-$14 mn to the revenue. Company had acquired 50% of Systime for Rs104 crs and it would acquire the remaining 50% over the next 3 years for which it would have to pay ~Rs150-200 crs. In the current Qtr, the company has acquired additional 7.5% in SYSTIME. In addition, the board has approved an investment of upto $25 million in the company's wholly-owned US-based subsidiary, KPIT Infosystems Inc, in the form of loan/equity in a phased manner.

Valuation & Recommendations

Nirmal Bang are revising our numbers upwards for FY12E and FY13E factoring good growth the company showed in the current quarter. Nirmal Bang have revised Revenues and PAT by 4.0% and 9.2% respectively for FY12E and by 3.4% and 0.1% respectively for FY13E. At CMP, the stock is trading 10.2 times and 8.8 times FY12E and FY13E expected earnings. They continue to maintain ‘Hold’ view on the stock with a target price of Rs190

KPIT CUMMINS:: Fairwealth Investment Ideas 2012

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KPIT CUMMINS


KPIT Cummins (KPIT) provides technology solutions partner for global

Manufacturing corporations with special focus on Automotive, Energy & Utilities,

Industrial Equipments, and Semiconductor industries. Highly focused approach

has helped company to pioneer innovative solutions and file 37 patents in the

Automotive and Semiconductor domains. Following the acquisition of Sparta,

KPIT’s revenue from its SAP-related ERP services doubled over the past two

years.

Investment Rationale

􀂾 KPIT Cummins has been experiencing strong demand environment due to

cyclical up-tick in its manufacturing vertical, positive structural changes in

Automotive clients, emerging economies growth and ramp ups from newly

acquired business (CPG, In2Soft and Sparta).

􀂾 We expect the robust growth to continue going ahead with strong Automotive

engineering demand, sustained IT spending by manufacturing clients being the

key growth drivers.

􀂾 KPIT has shown one of the strongest revenue growth performance within the

mid-cap space with revenue growth of 46% (40% organically) due to strong

demand up-tick in major verticals.

􀂾 KPIT acquired 50% stake in leading Oracle JDE enterprise service provider,

Systime, for ~Rs1.03bn in Q1 FY12 thus strengthening its Oracle offering

providing access to marquee clientele and un-penetrated geographies.

􀂾 KPIT registered strong deal wins during 2QFY12. Traction from top client has

also improved (36% yoy in 2QFY12). Moreover, it has also won a large deal from

its top client recently. In addition, we expect KPIT’s partnership with PACCAR to

ramp up by 1QFY13 and account for ~5% of employee base of KPIT. These

strong deal wins and PACCAR relationship improve medium term visibility on

revenue growth.

􀂾 Despite consolidation of lower-margin SYSTIME, we believe that due to

depreciating INR, KPIT will register a strong 250bps improvement in EBITDA

margins by 4QFY12.

Valuations

The stock is currently trading at 13.5x FY11P/E which appears to be cheap. We

assign BUY rating to the stock with a target price of Rs.185 indicating potential

upside of 27% from current levels.

Buy KPIT CUMMINS INFOSYSTEMS:: Target: RS.211:: Kotak Sec,

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KPIT CUMMINS  INFOSYSTEMS LTD
PRICE: RS.142 RECOMMENDATION: BUY
TARGET  PRICE:  RS.211 FY13E P/E: 8X
In our recent interaction, the management of KPIT indicated comfort in
achieving the revenue and PAT growth guidance of about 25%, given
earlier. The recent rupee depreciation should help further. While there have
been no project cancellations there is some slowdown in decision making in
a few accounts, of late.
The partnership with PACCAR is ramping up as scheduled, with the initial
team already set up. Cross selling opportunities with Systime have also led
to successes. The regulatory processes for REVOLO are progressing but the
final launch date is not known. Attrition has trended down during the
quarter.
We opine that, the company is strategically well positioned with focus
verticals doing well. It has also made well - directed acquisitions which
should help it penetrate clients and geographies. These acquisitions should
scale up in FY12 and FY13.
KPIT is now increasingly focusing on non-linear revenues and has filed
about 39 patents. 6-7% of overall revenues (mostly from auto electronics)
currently accrue from non-linear initiatives. KPIT plans to have 25% of
revenues from these initiatives in 3 years' time. We believe this is an
important lever to protect and sustain margins.
We maintain our FY12E and FY13E estimates. We expect earnings at Rs.15.5
per share for FY12E and Rs.17.5 per share for FY13E. Our PT stands at Rs.211
based on FY13E earnings. There could be upsides based on Revolo
financials. At our TP, the stock will be valued at about 13.5x FY13E earnings,
a suitable discount to larger peers. We maintain BUY.

52-WEEK BLOCKBUSTER: KPIT CUMMINS ::Business Line

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Mid-tier IT player KPIT Cummins' stock has been highly resilient over the past one year. The company has had an impressive run in growing both its revenues as well as net profits at a robust pace over the past couple of years. It was aided in this process by the acquisitions made over the past couple of fiscals, which have played out well.

In the first half of FY12, KPIT saw its revenues rise by 50.8 per cent over the same period last fiscal to Rs 641.1 crore, while net profits increased by 40.5 per cent to Rs 60.6 crore.

The company derives more than two-thirds of its revenues from the automotives, transportation and manufacturing verticals. This segment has been growing at a healthy pace.

What is even more desirable for KPIT is that high-margin services such as SAP implementation are also seeing steady traction. Because of the inorganic path that the company took for penetration in this (SAP) segment, it has been able to win some $10-million plus deals in the manufacturing and automotive industries.

In the recent September quarter, KPIT has signed three large deals worth $100 million totally. Debtor days too have reduced significantly over the last quarter from 71 days to 66 days currently.

On the flip side, the company's onsite component of revenues has gone up in recent times, and could increase costs.

Buy KPIT Cummins, target RS.211:: Kotak Sec,

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KPIT CUMMINS
PRICE: RS.167 RECOMMENDATION: BUY
TARGET PRICE: RS.211 FY13E P/E: 10X
q KPIT's 2QFY12 results were broadly in line with expectations. A higher
other income component led to out-performance on the PAT front. The
5% like-to-like volume growth came on the back of high growth rate sin
the past three quarters. Margins were higher on the back of better capacity
utilization and rupee depreciation and despite some one time expenses.
q Management commentary suggests decent visibility on revenues going
ahead. We opine that, the company is strategically well positioned with
focus verticals doing well. It has also made well - directed acquisitions
which should help it penetrate clients and geographies. These acquisitions
should scale up in FY12.
q Strong additions to the pipeline and additions to client acquisition resources
should lead to consistent revenue growth ahead. Company
added strategic accounts with deal value of $100mn. KPIT is now increasingly
focusing on non-linear revenues and has filed about 39 patents. 6-
7% of overall revenues (mostly from auto electronics) currently accrue
from non-linear initiatives. KPIT plans to have 25% of revenues from
these initiatives in 3 years' time. We believe this is an important lever to
protect and sustain margins.
q Revolo's launch has once again been delayed and is now expected to be
commercially launched in FY13, we opine. The non-linear nature of revenues
should improve profitability, we believe. We have not yet accounted
for these revenues in our projections.
q We fine tune our FY12E estimates on the back of the changed assumption
on the exchange rate. We also introduce our FY13E estimates. We
expect FY12E earnings at Rs.15.5 per share and Rs.17.5 per share for
FY13E. Our PT stands at Rs.211 based on FY13E earnings (Rs.199 earlier
based on FY12). There could be upsides based on Revolo financials. At
our TP, the stock will be valued at about 14x FY13E earnings, a suitable
discount to larger peers. We maintain BUY.
q Belied hopes of volume-led-growth in IT services, demand in major user
economies and a sharper-than-expected appreciation in rupee remain the
key risks for earnings. Revolo earnings can provide significant upsides, if
successful.

KPIT Cummins Info System : Theme -Winter Picks :: Anand Rathi

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KPIT Cummins Info System Target 180
KPIT Cummins Infosystems (KPIT) is a niche IT services company providing engineering services and Business IT for
manufacturing companies apart from providing IT services to BFSI, Energy & Utilities and Defence and Government
corporations. KPIT’s expertise lies in the IT services it provides to Automotive Transportation and manufacturing sector
which accounts for ~76% -78% of its revenues.
The company has realized that dependence on few clients (mostly Auto & Manufacturing sector) may hurt its revenues
during downturn. As a result, it is developing new verticals and lines of business to diversify its revenues. Over last few
years, its share of non core business has increased to around 23% in FY11 and expected to be ~21-24% by FY13E.
Since the acquisition of Cummins InfoTech in 2002, the majority revenues of KPIT are from the Automotive vertical.
Cummins accounts for 23% of its total revenues.Stress on increasing service bouquet in automotive segment coupled with
emphasis from auto producers to provide technologically advanced services provides a huge opportunity for KPIT