Birlasoft Ltd. share price target

They revise their outlook on KPIT Tech considering the ominous challenges looming over the SBU and vertical portfolios, resulting into growth dichotomy within segments. Our earlier expectation of recovery seems protracted beyond the near to medium term, which is in sync with the recent business update by the management.Weakness in ERP implementation will dent the quarter as well as 1HFY17E. The IES division is likely to be impacted with lower traction in Oracle JDE, which is linked to the energy vertical (energy and utilities comprise 18% of revenue). It will also be impacted by lower on-premise spend as thrust on cloud services gathers momentum. We’ve factored USD revenue growth at -1.4/7.8% for FY17E/18E and EBITDA of 12.8/13.1% for the same period, with 1% EPS CAGR over FY16-18E. With the EPS downgrade of 21/23% and 9x FY18E EPS (discount to five-year average of 10.5x), HDFC Securities lower our TP to Rs 130 (Rs 205 earlier) with a SELL.

Trendlyne has 17 reports on KPIT updated in the last year from 6 brokers with an average target of Rs 162.7. Brokers have a rating for KPIT with 2 downgrades,3 price downgrades and 5 price upgrades in past 6 months,3 downgrades,5 price downgrades and 6 price upgrades in past 1 Year.

KPIT issued a profit warning yesterday, guiding to a 4% qoq decline in US$ revenues for 1QFY17.

The company mentioned that it is ‘going through internal changes in structure as well as external changes in the business environment’. The revival in its ERP business is much more prolonged than what the management earlier anticipated.

The management also expects 2QFY17 to be flat qoq – both in terms of revenue and profitability. Phillip Capital continues to value the stock at 9x FY18 P/E – though we see a downside risk to the multiple, if the weak performance persists. Phillip Capital price target of Rs 125 (RS 140 earlier),maintain SELL.

Trendlyne has 16 reports on KPIT updated in the last year from 6 brokers with an average target of Rs 175.2. Brokers have a mixed rating for KPIT with 1 downgrade, 2 price downgrades and 5 price upgrades in past 6 months, 2 downgrades and 6 price upgrades in past 12 months.

KPIT Technologies is leading product engineering and IT consulting partner with FY16 revenue of INR 32.2bn. In 4QFY16 revenue share amongst verticals: automotive & transportation (39.69%), manufacturing (34.92%) & Energy & Utilities (17.98%) and others (7.42%). It operates in five main business segments: Integrated Enterprise Solutions (33.76%), Product Engineering Services (28.72%), Product and Platform (5.12%), SAP (22.50%) and Digital Transformation (9.9%). KPIT derives 13.94% of its revenue from Cummins, which is the largest client. The company has 10,095 employees spread across more than 10 countries to cater services to...

KPIT had a muted 4QFY16, with revenue up 0.7% QoQ (US$ 124.2mn vs. estimate of US$ 125mn) following a sharp drop in SAP SBU. On a positive note, EBITDA margin rose 118bps QoQ, led by INR depreciation and the employee pyramid benefits.

ICICI Securities Ltd | Retail Equity Research KPIT reported decent quarterly earnings in Q4FY16 US$ revenues grew 0.7% QoQ to $124.2 million in-line with our 1%...

Geographies: Europe and ROW up 3.9% and 1.6% qoq; America declined 0.3% qoq. Services: Products & Platforms grew 35.3% qoq (seasonality impact), Engg Services grew by 9.8% qoq. SAP declined 12.5% qoq....

Within SBUs, growth was led by Product Engineering Services supported by strong growth in Automotive vertical; Digital solutions was flat for the quarter; product & platform continued to be lumpy on ITS cyclicality, however it is expected to improve ahead. EBITDA margin has shown a consistent improvement and came at 15.7%, +120bp qoq supported by 1) +55bp impact on INR depreciation, 2) offshore-shift, and 3) productivity improvement as blended utilization increased to 73.6%, +100bp qoq. Margin is expected to remain at current level based on continued fresher addition, increase in offshore utilization and growth-led operational lever. PAT stood at Rs885mn,...

We are pleased to invite you to KPIT Technologies 4QFY16 post results conference call with the senior management. The conference call will be held on Thursday, 28th April, 2016 at 4:00 PM (IST). The call will be initiated with a brief management discussion on the earnings performance followed by an interactive Question & Answer session. The management will be represented by: Mr. Ravi Pandit, Co-founder, Chairman & Group CEO Mr. Kishor Patil, Co-founder, CEO & MD Mr. Sachin Tikekar, Board Member President- Strategic Relationships & Business Transformation Mr. Anil Patwardhan, Sr. VP & Head Corporate Finance & Governance...

be a tight balance ahead between further pyramid rationalisation (higher fresher hiring) and improving offshore utilisation (70%). Continuous decline in IES business remains a concern so does decline in the top5 clients. We remain sceptical of KPIT being able to...