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KPIT Technologies is leading product engineering and IT consulting partner with FY16 revenue of USD 487mn. In 1QFY17 revenue share amongst verticals: automotive & transportation (38.59%), manufacturing (37.49%) & Energy & Utilities (16.12%) and others (7.81%). It operates in five main business segments: Integrated Enterprise Solutions (35.83%), Product Engineering Services (29.36%), Product and Platform (2.17%), SAP (24.02%) and Digital Transformation (8.62%). KPIT derives 12.8% of its revenue from Cummins, which is the largest client. The company has 10,450 employees spread across more than 10 countries to cater...

KPITs performance in 1QFY17, following its business warning earlier, reconfirms growth volatility and a skewed business profile. A massive decline in the energy vertical (11.7% of revenue) as well as continued pressure in the top account (Cummins) impacted IES and PES SBUs. This contributed 45% to the 1Q decline and worries us.

Revenue declined 3.5% qoq in USD marginally better than our estimates (-4.2% qoq). Verticals: Manufacturing grew 3.3% qoq. E&U; and Auto declined -13.5% and -4.8% qoq. Geographies: ROW grew 4.4% qoq; America and Europe declined -5.5% and -1.6% qoq. Services: SAP grew 3.0% qoq (after 12.5% decline in last quarter). Enterprise Solutions grew 1.8% qoq. Engineering Services and IES declined by 5.6%/2.6% qoq. EBITDA margins contracted 507bps to 10.7% marginally lower than our expectation of 11%. The margins were impacted by salary hike (-250bps). Net profit at Rs 551mn, was down 41.2% qoq marginally higher than our expectation...

In line with our estimate, KPIT's revenue declined 3.5% qoq to US$119.8mn. While volume remained flat sequentially, blended pricing saw 3.1% qoq decline. On a yoy basis, blended pricing dipped 2% marking the 9th successive quarter of yoy decline. Delivery-wise, this is the 9th successive quarter of yoy pricing decline offshore and 11th successive quarter onsite. Pressure is severe particularly offshore, with billing rates down 8-10% yoy in each of the past 4 quarters clearly reflecting the struggles that KPIT is facing on this front, owing to challenges being faced by its top clients, IT...

Revenue decline led by multiple factors: KPIT's 1QFY17 revenue of USD120m (-3.5% QoQ) came in line with our estimate, post management's guidance of a weak quarter. The revenue decline was led by aggravated weakness at its top client (-12% QoQ), pressure in Product Engineering and Energy verticals, and ERP implementation. The revenue decline, along with wage hikes and investments, resulted in a margin decline of 550bp QoQ to 10.7%. Growth recovery not imminent: Revenue growth recovery in FY17 appears difficult, especially with the Product Engineering business under pressure....

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%...