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You are here : IndiaNotes >> Research & Analysis >> Companies >> KPIT Technologies Ltd. >> Research

KPIT Technologies: Reports improved set of number in Q2FY17; Hold

Nirmal Bang | 26 Oct, 2016  | Follow Author | Add to my Favourites 
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KPIT Technologies


CMP:
Rs. 146   


Target: 150


Recommendation:
HOLD


KPIT reported improved set of numbers in Q2FY17 where USD($) revenues improved by 3.05% QoQ and came in at 123.43 mn in Q2FY17 vs 119.8mn in Q1FY17. Rupee revenue in turn improved by 3.3% which came in at Rs 829.5cr in Q2FY17 vs Rs 803.2cr in Q1FY17 mainly supported by growth from the product business. In last quarter KPITs dollar revenue had declined by 3.52% which was mainly led by dip from the product business. Total product business contributed around 5% to the total revenue in Q2FY17.Products & platforms came in at Rs 37.33 cr in Q2FY17 vs Rs 17.43cr in Q1FY17 and  Rs 32.13 cr in Q4FY16.Other than this, Product Engineering services came in at Rs 276.21 cr in Q2FY17 vs Rs 235.83cr in Q1FY17 also led to the growth to the company. Higher growth in sales led to improvement in Ebitda margins of the company by 36bps QoQ.  Growth in EBitda margins could not be sustained on PAT mainly due to lower forex income. APAT margins depressed by 8 bps QoQ. APAT came in at Rs 56.2cr in Q2FY17 vs Rs 55.1cr in Q1FY17.


Valuation and Outlook


We expect KPIT to report improved set of numbers in H2FY17. Going forward, acquisition and mining of accounts may lead to growth to the company. The company is investing in building new product which may start generating revenue in next few quarters. Better employee pyramid, with higher utilization accompanied with lowering cost structure will lead to improvement on the operational margins of the company. Long term outlook looks positive. At CMP, the stock is trading at 12.1/9.7x its FY17E/FY18E earnings. We recommend HOLD with a revised target price of Rs.150(10x FY18E EPS).


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About Nirmal Bang

Founded in 1986 by Nirmal Bang, the Nirmal Bang is recognized as one of the largest retail broking houses in India, providing an array of financial products and services. Their retail and institutional clients have access to products such as equities, derivatives, commodities, currency derivatives, mutual funds, IPOs, insurance, depository services and PMS. The Group is headed by Mr. Dilip Bang and Mr. Kishore Bang.


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Disclaimer: The author has taken due care and caution to compile and analyse the data. The opinions expressed above are only the views of the author, and not a recommendation to buy or sell. Neither the author nor IndiaNotes.com accept any liability whatsoever arising from the use of any of the above contents.




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