KPIT Cummins - 4QFY13 results - Kotak

KPIT reported an in-line revenue growth but margins surprised positively. Revenues grew QoQ despite a sharp expected fall in Cummins' revenues as the company managed to scale up non-Cummins Top 9 accounts by 6% QoQ. EBIDTA margins were up due to mix change and improvement in utilization levels. Management commentary echoes the optimism of the previous quarters and that sounded by other leading peers about the continuing traction in automotive, manufacturing and hi-tech verticals, the mainstay of KPIT. However, we note that, the company has faced constraints with some clients and we will continue to be watchful of this trend. KPIT has guided for about 15% revenue growth in FY14 and about 18% PAT growth.

We maintain our FY14E EPS at Rs.12.4, post the recent equity dilution of about 7.3%. Our FY14E-based TP stands at Rs.131 (Rs.139). At our TP, the stock will be valued at about 10.5x FY14E earnings. This is a suitable discount to larger peers. Looking at the near 25% upside, we maintain BUY. We remain positive on the long term prospects of KPIT.

Source : Equity Bulls

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