Earnings Update - KPIT Technologies (KPIT IN) - Growth momentum is gaining - CSEC Research

Growth momentum is gaining

- In 4QFY17, KPIT reported healthy revenue growth of 3.3% QoQ to INR 8,585mn. In dollar terms, revenue grew by 4.4% QoQ to USD 128.3mn. In Constant Currency terms, revenue grew 4.5% QoQ.

- EBITDA grew by 2.8% QoQ to INR 870mn. EBITDA margin stood at 10.1%. (-10 bps QoQ). EBITDA margin declined mainly on account of an increase in employee cost (+1.8% QoQ) and currency headwind (40 bps adverse impact). Additional integration expenses in MicroFuzzy also impacted margins. Decline in margins was offset by increase in utilization at both onsite (+22 bps QoQ) and offshore (+43bps QoQ) levels at 89.4% and 68.3%, respectively. Adjusted PAT declined by 27% QoQ to INR 537mn.

Valuation: Management indicated a slight improvement in margins for FY18E on the back of an increase in utilization (mainly offshore) and change in revenue mix. At CMP, the stock is trading at 10.0x FY18E and 8.7x FY19E earnings. We upgrade to OUTPERFORMER rating with revised target price of INR 143 based on a target P/E of 9.0x FY19EPS.

Risks: Adverse cross currency movement and delay in project ramp ups could have a material impact on projected revenues.

Shares of KPIT Technologies Limited was last trading in BSE at Rs.126.4 as compared to the previous close of Rs. 128.3. The total number of shares traded during the day was 27723 in over 473 trades.

The stock hit an intraday high of Rs. 129.35 and intraday low of 126.05. The net turnover during the day was Rs. 3525665.

Source : Equity Bulls

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