Birlasoft Ltd. share price target

US$ revenues declined 0.4% QoQ to $141.2 million and were below our 1.6% growth and $144 million estimate. Constant currency revenues were flat sequentially Revenues in rupees declined 0.4% QoQ to | 912.8 crore and were below our estimate of 1.7% growth and | 932 crore EBITDA margins expanded ~100 bps QoQ to 10.8% and were way above our 9.9% estimate. Margin expansion was on the back of lower cost of material consumed, which declined ~66% sequentially...

Background: KPIT Technologies is leading product engineering and IT consulting partner with FY17 revenue of INR 33.2bn. In 3QFY18 revenue share amongst verticals: automotive & transportation (44.11%), manufacturing (28.99%) & Energy & Utilities (18.28%) and others (8.62%). It operates in five main business segments: Integrated Enterprise Solutions (26.8%), Product Engineering Services (38.95%), Product and Platform (3.84%), SAP (19.98%) and Digital Transformation (10.34%). KPIT derives 12.17% of its revenue from Cummins, which is the largest client. The company has 12,211 employees spread across more than 10 countries to cater services to 237 clients. The company's...

In-line Performance; Value Unlocking on the Cards KPIT Technologies (KPIT) has delivered in-line performance in 3QFY18 with revenue remaining flattish (-0.4% QoQ) at US$141.2mn. Whist revenue from Product Engineering business grew by 2.8% QoQ, revenue from other segments i.e. IES, Products & Platforms, SAP, Digital and Transformation sequentially declined by 0.8%, 8.3%, 3% and 2.8%, respectively. EBITDA margin expanded by 98bps QoQ owing to higher utilisation and cost control. Despite 77.7% QoQ decline in other income owing to forex losses, KPIT's net profit grew by 3.3% QoQ on the back of lower effective tax rate. From vertical perspective, revenue from Energy & Utilities and...

KPIT announced a merger with Birla soft and a subsequent demerger of its Engineering business, effectively implying creation of two separate businesses- the combined KPIT-Birla soft entity and the Engineering entity. As part of the deal, shareholders of Birla soft will receive 22 equity shares of the combined KPIT-Birlasoft entity for every nine shares of Birlasoft. Share count at Birlasoft was 31.4m, implying that the swap ratio would lead to creation of ~77m shares, 39% of current equity base. At CMP of INR208 as on 29th January 2018, this implies EV of INR13b (USD200m) for Birlasoft, after adjusting for net cash of INR3b (USD47m) on the company's balance sheet.

Maintain NEUTRAL with a TP of Rs 140, 10x Sep-19E EPS (9x earlier). KPIT Tech posted a strong beat on revenue and margins in 2Q. Revenue came in at USD 142mn, 5.7% QoQ based on 4.3% QoQ CC. EBITDA% came in at 9.9%, +72bps QoQ. This was supplemented by utilisation/productivity improvement and realisation increase, which mitigated the impact of wage hike (-180bps margin impact).

ICICI Securities Ltd | Retail Equity Research KPIT reported a better-than-expected Q2FY18 performance on all fronts. The EBITDA margin was sharply ahead of our expectations despite the impact of wage hike US$ revenues grew 5.5% QoQ to $141.8 million above our 2.5%...

a USD2m license sale from previous quarter. 13.7% YoY growth in 1HFY18 (~10% organic) puts KPIT on a strong footing after flat revenue in FY17. Margin improvement despite wage hikes: EBITDA margin at 9.9% was up 80bp QoQ, and above our estimate of 8.5%. Expansion was seen despite a wage hike and comes as a positive, especially after multiple quarters of disappointment. The 180-200bp negative impact of salaries was more than offset by [1] strong revenue growth, [2] absorption of freshers, [3] higher utilization (+140bp on offshore and +300bp on onsite), and [4] operational...

We've factored in USD revenue growth of 10.5/8.4% for FY18/19E, implying 1.1/2.6% CQGR for the same period. Expect EBITDA% to decline in 2Q, and subsequently improve (factored 9.8/11.6% for FY18/19E). Maintain NEUTRAL with a TP of Rs 125, 9x FY19E. KPIT reported steady revenue growth (3.5% CC) and in-line operating performance (-100bps QoQ to 9.1% EBITDA). Revenue of USD 134mn, 4.8% QoQ was supported by USD 2mn non-recurring license revenue (+1.6% revenue impact). IES, Product Engineering Services and Product & Platform led growth among SBUs.

ICICI Securities Ltd | Retail Equity Research KPIT reported a better than expected Q1FY18 performance while EBITDA margin was sharply ahead of our expectation as it has deferred a wage hike to the next quarter US$ revenues grew 4.8% QoQ to $134.4 million above our 1.5% growth and $130.2 million estimate Revenues in rupees grew 1.4% QoQ to | 870.4 crore and were above our estimate of 2.2% decline and | 839.4 crore...

Healthy Growth in Revenue, But Margin Pressure Impedes Earnings KPIT Technologies (KPIT) has reported a healthy 4.8% QoQ growth in USD revenue to US$134.4mn in 1QFY18. However, adjusting for one-time technology licence revenue of US$2mn, adjusted revenue rose by 3.2% QoQ (1.9% QoQ in CC terms). EBITDA margin declined by 101bps QoQ, which was largely in-line with our estimate. INR appreciation was the key margin headwind in the quarter. Looking forward to 2QFY18E, KPIT will award wage hikes, which will have a 225-250bps impact on margins. The company is looking to drive utilisation, productivity and cost efficiency to offset these headwinds....