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Research
KPIT Cummins - 4QFY2013 Result Update - Angel Broking
Posted On : 2013-05-05 21:18:35( TIMEZONE : IST )
For 4QFY2013, KPIT Cummins Infosystems (KPIT) reported broadly in-line numbers on the revenue front but ahead on the operating front. The EBITDA margin came in at 17.7%, up 208bp qoq, and above our estimate of 15.8%. For FY2014, the company guided for a revenue band of US$465m-475m, implying a growth of 13.3%-15.7% yoy, which is encouraging. We continue to remain positive on the stock and maintain Buy rating on it.
Quarterly highlights: For 4QFY2013, KPIT reported a revenue of US$105.5mn, up 2.0% qoq. In INR terms, the revenue came in at Rs. 570cr, up 1.2% qoq. The EBITDA and EBIT margins increased by 208bp and 205bp qoq to 17.7% and 15.6%, respectively. The EBITDA margin expansion was a function of the company's business mix, ie a higher growth in auto & engineering (+9.1% qoq), where EBITDA margin is upwards of 20%, while SAP declined (-5.0% qoq), where full year (FY2013) margin was 5%. The PAT came in at Rs. 51cr, down 14.6% qoq, below our estimate of Rs. 54cr, despite significant margin beat, on account of forex loss of ~Rs. 12cr.
Outlook and valuation: KPIT's USD revenue for FY2013 grew by 33%, exceeding the Management's guidance of 32% and much ahead of industry's FY2013 growth rate. For FY2014, the company guided for a revenue band of US$465mn-475mn, implying a growth of 13.3%-15.7% yoy, which is encouraging and higher than Nasscoms' industry growth estimate of 12-14%. The company expects EBITDA margin in FY2014 to expand ~50bp yoy to 16.8%. PAT guidance range for FY2014 stands at Rs. 231-239cr, implying a growth of 16%-20%. The company is growing ahead of other peer companies in terms of revenue; on the operational front, the company's performance has been improving since the last four quarters. Over FY2013-15E, we expect the company to post USD and INR revenue CAGR of 12.8% and 12.2%, respectively. PAT is expected to post a CAGR of 13.3% over FY2013-15E. We value the company at 10x FY2015E EPS, which gives us a target price of Rs. 135. We maintain Buy rating on the stock.
