KPIT Cummins Infosystems - Unique DNA but likely priced in... - ICICIdirect

KPIT Cummins Infosystems (KPIT) is a differentiated manufacturing, automotive and energy & utilities vertical play that could aid investors aspiring to diversify their midcap, BFSI focused, IT portfolio. Notably, it is among the few midcap companies that consistently spends on R&D and has filed ~40 patents.

Despite concerns over acquisition led growth, generic for midsized IT companies, organic revenues grew at ~26% CAGR during FY07-12, while consolidated revenues and PAT grew at 41.3% and 53.7% CAGR, respectively, during FY02-12. We are modelling revenues/PAT CAGR of 34.7%/34.9%, respectively, during FY11-14E coupled with 82 bps EBITDA margin expansion in FY13E to 15.4%, led by improvement in below company average SBU margins.

Though growth is not scarce at KPIT, concerns related to weak cash generation continue to take centre stage in the current macro. We would wait for attractive entry points to accumulate the stock. Initiate with HOLD and TP of Rs.120.

Source : Equity Bulls

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