Dear All,
Forwarding you the Result Flash on KPIT for 4QFY2011.
KPIT Cummins Infosystems (KPIT) reported its 4QFY2011 results which outperformed street as well as expectations on revenue front but came inline with the expectations at the bottomline front. The dollar revenues came in at US$67.9mn (vs. our expectation of US$60mn), a whopping 12.5% qoq growth, on the back of strong volume growth of 10.6% qoq. In INR terms, revenue came in at `308.2cr, up 12.6% qoq. However, operational performance was muted as EBITDA margin come in flat qoq at 14.1%, while EBIT margin declined by 220bp qoq to 8.8% due to increased employee costs by 10.8% qoq. PAT stood at `26.3cr (vs. our expectation of `26.8cr), up 4.7% qoq.
4QFY2011: Result highlights
| (Rs cr) | 4QFY11 | 4QFY11E | % Var | 3QFY11 | % chg (qoq) | 4QFY10 | % chg (yoy) |
| Net revenue | 308 | 272 | 13.3 | 274 | 12.6 | 197 | 56.4 |
| EBITDA | 43 | 41 | 6.3 | 39 | 12.1 | 39 | 12.1 |
| EBITDA margin (%) | 14.1 | 15.0 | (92)bp | 14.1 | (6)bp | 19.6 | (555)bp |
| PAT | 26 | 27 | (1.6) | 26 | 2.5 | 21 | 26.8 |
Key highlights:
· The net additions were strong at 285 employees, taking the total employee base to 6,514. The company added more than 800 freshers during FY2011.
· During the quarter, the company reported strong growth in all the three major SBU’s, IES, Auto & engineering and SAP of 9.3%, 13.9% and 13.7% qoq, respectively.
· KPIT’s anchor industry vertical, manufacturing, posted 21.39% qoq growth in its revenues.
· Offshore as well as onsite utilization increased by 231bp and 116bp qoq to 69.88% and 90. 23%. The company has still got headroom to increase its utilisation from existing levels which can act as an important lever to pull up its margin.
· KPIT added three new customers during 4QFY2011. Also, active client base of the company stood at 155 as against 152 in 3QFY2011.
· KPIT’s revenue from its top client, Cummins, grew 5.6% yoy in FY2011. The company foresee increase in both, IT and engineering, spend coming to KPIT from the Cummins account in FY2012.
The overall results were mixed bag as the growth preceded over profitability but the guidance is very promising. The company outperformed its USD revenue growth guidance of 38–40% yoy for FY2011 and reported 45.7% yoy growth in USD revenue to US$224mn. For FY2012, KPIT has guided for USD revenue of US$275mn–285mn, i.e., 23–27% yoy growth; and has given PAT growth guidance of 22–27% yoy. Also, the company has announced a substantial wage hike of 12–14% for offshore employees and 2–4% for onsite employees, effective from April 1, 2011 which will impact its operating margin in 1QFY2012 by 200-250bp. We remain positive on the stock and will most likely maintain our target price of `189.
If you have any further queries, feel free to call us on 022 39357600, Extn: 6864 / 6865 or mail us at advisory@angelbroking.com
With best regards,
Fundamental Advisory Desk
Angel Broking
Akruti Star,6th Floor, Road No.7,MIDC, Andheri (E),Mumbai – 93.
Call : (91) (022) 39357600 Ext. 6864,6865
Website : www.angelbroking.com
Disclaimer: Ours is an advisory role. The final decision and consequences based on our information is solely yours. Moreover, in keeping with regulatory guidelines, we do not guarantee any returns on investments. Prospective investors and others are cautioned that any forward-looking statements are not predictions and may be subject to change without notice.
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