KPIT Technologies down after lowering its revenue guidance

Venkatasubramanian K BL Research Bureau | Updated on January 24, 2018

KPIT Technologies is the latest in the string of large- and mid-tier IT players that have guided for a muted fourth quarter revenue growth. And the markets haven’t taken kindly to the news as the stock suffered a six pr cent cut in trading on Tuesday.

The company has indicated that sequential growth for the March quarter would be flat.

This has been attributed to currency volatility. Since the euro has considerably weakened against the dollar and even against the rupee over the past few months, realisations have been hurt for several software players.

Although the rupee dollar equation has largely remained stable at 62-63 levels, the weakness of the other currencies have hurt. So revenues are likely to be lower by 100-200 basis points for companies during the quarter.

Reduced annual guidance:

KPIT Technologies has also indicated that it would meet its annual revenue guidance of $498 million(lower end) for FY15 only in constant currency terms. That means that on a reported basis, it might be lower. This would represent a growth in revenues of about 12 per cent over FY14. The company has indicated though that there may be only a marginal growth in profits compared to the previous fiscal.

It caters mainly to clients in the manufacturing, automotive and energy & utilities verticals and has witnessed steady growth over the years.

It trades at a reasonable multiple of 14 times its trailing twelve month pr share earnings and is cheaper than its peers. Fundamentally, only the currency seems to have played spoilsport and there do not appear to be any specific challenges in terms of delays in project awards from clients, for now.

KPIT Technologies has reiterated that it is optimistic about its prospects for FY16.

Published on March 17, 2015

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