KPIT Technologies Ltd's Q3FY19 consolidated net profit declines 22% qoq to Rs64cr: Misses Estimates

The company’s consolidated revenue stood at Rs1,061cr, down 1.6% qoq but up 16.3% yoy.

Jan 16, 2019 09:01 IST India Infoline Research Team

KPIT Technologies Ltd Q3FY19

Consolidated Results Q3FY19: (Rs in cr)

Q3FY19 QoQ (%)
Revenue 1,061.32 [1.6]
EBIT 93.33 [15.0]
EBIT Margin (%) 8.8 [138]
Net Profit (adjusted) 63.92 [22.1]
***EBIT margin change in bps
KPIT Technologies reported lower-than-expected set of numbers for Q3FY19 on all fronts. Revenue during the quarter declined by 1.6% qoq to Rs1,061cr against the median consensus estimate of Rs1,108cr. Revenue in dollar terms declined 2.3% qoq to $149mn. Reported EBITDA came in at Rs93cr, down 15.0% qoq against the median consensus estimate of Rs113cr. The EBIT margin stood at 8.8%, down 138bps qoq. The reported PAT declined by 22.1% qoq to ~Rs64cr.
  • Revenue decline in constant currency (cc) terms was 1.7% qoq. Business IT revenues were down 7.5%, whereas engineering showed a growth of 5.7% during Q3FY19.
  • During the quarter, there was an average loss of 1.5 billing days per person due to furloughs and holidays. This had a negative impact of ~2.5% on IT revenues. Additionally, there were two large projects completed during the quarter leading to lower billings and revenue impact of 3.5% on the IT revenues.
  • Amongst SBUs, the PES SBU grew significantly, up 5.1%qoq. The P&P SBU declined 9.2% qoq and the DT SBU also registered qoq decline of 4.4%.
  • IES and SAP SBUs declined sequentially by 1.8% and 17.5%, respectively. IES was impacted by movement towards cloud adoption in Oracle and JDE, resulting in movement away from traditional pool of services and lower billing days. SAP was impacted by furloughs and project closures.
  • Among geographies, Europe registered qoq growth of 13.9%, while the US & RoW declined 5.5% and 9.2% respectively.
  • In terms of industry verticals, there was sequential growth of 3.5% in the Automotive vertical, whereas the Energy & Utilities vertical declined 9.3% and the Manufacturing vertical declined 5.6% on a qoq basis.
  • The top 20 strategic accounts constituted 49.9% of the total revenues and sequentially rose 0.8%. Similarly, the top 40 strategic accounts constituted 64.1% of the total revenues and witnessed a qoq decline of 2.4%.
  • The other income came in at Rs0.3cr v/s Rs7cr in Q2FY19 and effective tax rate was higher by ~500bps resulting in drag on profitability.
  • The company has fixed January 25, 2019 as the Record Date for the purpose of identification of shareholders of the Company to whom the shares of KPIT Engineering Limited would be allotted.

Technical View:

KPIT Technologies Ltd is currently trading at Rs. 202, down by 9.5 points or 4.49% from its previous closing of Rs. 211.50 on the BSE.
The scrip opened at Rs. 199 and has touched a high and low of Rs. 204.10 and Rs. 198.40 respectively. So far 22,79,821 (NSE+BSE) shares were traded on the counter. The stock is currently trading above its 200 DMA.

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