Comments
IDFC Securities
KPIT Technologies (Outperformer)
CMP: ₹136.70
Target: ₹180
Headquartered in Pune (India), KPIT Technologies is a global technology company that specialises in providing IT consulting and product engineering solutions and services.
KPIT reported revenue decline of 3.5 per cent q-o-q to $119.8 million while EBITDA margin eroded by 510 bps q-o-q to 10.7 per cent, driven by revenue decline, wage hike, investment in account management, visa costs and currency. EPS declined 41 per cent q-o-q to ₹2.87.
Key positives: SAP growth of 2 per cent q-o-q in rupee terms, employee addition.
Key negatives: Weak operational performance.
Impact on financials: FY17-18E EPS cut by 6-8 per cent.
KPIT’s soft performance was in line with the negative surprise in financial performance of peers so far. We believe top client challenges accentuated the soft quarter performance. We expect steady recovery in revenue growth in H2FY17 with margin uptick as the company will restructure its cost. KPIT is trading at 8x FY18E EPS, and we expect limited downside risk despite muted performance in FY17.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.