Accumulate KPIT Cummins Infosystems - 4QFY2012 Result Update - Angel Broking

For 4QFY2012, KPIT Cummins Infosystems (KPIT) reported in-line results. The company reported revenue growth of 30% qoq on account of Systime's acquisition. KPIT has closed three large deals over last six months, each in excess of US420mn. For FY2013, management has given 32-35% yoy USD revenue guidance, which is 2.5x more than Nasscom's guidance of 11-14% and includes ~US$40mn inorganic revenue from Systime. We maintain our Accumulate recommendation on the stock.

Quarterly highlights: For 4QFY2012, KPIT reported revenue of US$95.4mn, up by whopping 29.9% qoq because of revenue flowing from Systime's acquisition (~US$13mn). In INR terms, revenue came in at Rs.480cr, up 26.7% qoq. The company's EBITDA margin during the quarter improved by just 53bp qoq to 15.8% as incremental growth came from Systime, which has EBITDA margin at ~10%. PAT stood at Rs.33cr, down 17.4% qoq, impacted by Rs.11cr loss on the other income front in 4QFY2012 as against profit of Rs.11cr in 3QFY2012.

Outlook and valuation: KPIT's management has guided for whopping 32-35% yoy USD revenue growth for FY2013 (US$408mn-418mn), which is the strongest amongst its peers, even on the back of strong 40% yoy revenue growth recorded in FY2012 because of the company's strengthening deal pipeline. This guidance includes ~US$40m inorganic revenue in FY2013 from Systime. On the PAT front, the company has guided for 19-24% yoy growth to Rs.173cr-180cr. The company is growing ahead of other IT companies in terms of its revenue. We expect the company's revenue to post a CAGR of 22.2% and 21.6% in USD and INR terms, respectively, over FY2012-14E. On the EBITDA and PAT fronts, the company is expected to post a 23.2% and 17.1% CAGR over FY2012-14E, respectively. We value the company at 10x FY2014E EPS of Rs.11.4, which gives us a target price of Rs.114. We maintain our Accumulate rating on the stock.

Source : Equity Bulls

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