KPIT Tech (Q4 FY14)

India Infoline News Service | Mumbai |

Sharp 10%+ qoq revenue decline in top client Cummins account and completion of significant global SAP implementation project for another large customer led to 3% qoq de-growth in Top 5 client revenues.

CMP Rs168, Target Rs175, Upside 4.2% 
  • Q4 FY14 dollar revenue growth in-line; sharp jump in onsite volumes 

  • SAP business turning the corner; A&E SBU witnessing sustained traction 

  • Steep decline in Cummins revenues but impressive growth in most of the other large accounts 

  • Fails to achieve even lowered revenue guidance in FY14; FY15 growth guided at 12-14% 

  • Operating margin to improve in the longer term aided by multiple levers 

  • Achieves FY14 PAT guidance; cash generation deteriorates in Q4 FY14 

  • Downgrade rating to Market Performer with reduced 9-12 month price target of Rs175 

Result table
(Rs mn)
Q4 FY14
Q3 FY14
% qoq
Q4 FY13
% yoy
Net sales
7,001
6,779
3.3
5,699
22.9
Operating profit
1,102
1,035
6.5
1,013
8.8
OPM (%)
15.7
15.3
47 bps
17.8
(204) bps
Depreciation
(135)
(135)
0.2
(126)
7.1
Interest
(63)
(72)
(11.5)
(32)
100.8
Other Income
(177)
18
(1,111.9)
(93)
89.5
Exceptional Item
122
-

-

PBT
849
846
0.3
762
11.4
Tax
(235)
(238)
(1.3)
(207)
13.7
Effective tax rate (%)
(27.7)
(28.2)
-
(27.1)
-
Adjusted PAT
491
608
(19.2)
555
(11.5)
Adj. PAT margin (%)
7.0
9.0
(195) bps
9.7
(273) bps
Reported PAT
613
608
1.0
555
10.5
EPS (Rs)
3.2
3.1
1.0
2.7
19.5
Source: Company, India Infoline Research

Q4 FY14 dollar revenue growth in-line; sharp jump in onsite volumes 

KPIT’s dollar revenue growth was in-line with our expectations at 3.6% qoq driven largely by volume expansion of 3.1% qoq (onsite 9.6% qoq and offshore 1.6% qoq). During the quarter the effort mix shifted onsite by 120bps qoq thus driving an improvement in blended pricing by 0.5% qoq despite decline in both onsite (-2.8% qoq) and offshore (-1.3% qoq) on account of change in service mix.


SAP SBU turning th

BSE 170.00 [0.20] ([0.12]%)
NSE 170.10 0.35 (0.21%)

***Note: This is a NSE Chart

 

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