KPIT Technologies slumped 13.05% to Rs 159.90 at 11:38 IST on BSE after consolidated net profit fell 8.93% to Rs 60.77 crore on 3.53% fall in net sales to Rs 677.93 crore in Q3 December 2013 over Q2 September 2013.
The Q3 result was announced after market hours on Wednesday, 22 January 2014.
Meanwhile, the S&P BSE Sensex was down 2.25 points or 0.01% at 21,335.42
On BSE, so far 4.99 lakh shares were traded in the counter as against average daily volume of 85,118 shares in the past one quarter.
The stock hit a high of Rs 172 and a low of Rs 157.40 so far during the day. The stock had hit a record high of Rs 189.45 on 22 January 2014. The stock had hit a 52-week low of Rs 92.40 on 28 March 2013.
The stock had outperformed the market over the past one month till 22 January 2014, rising 9.27% compared with the Sensex's 1.22% rise. The scrip had also outperformed the market in past one quarter, advancing 25.32% as against Sensex's 2.27% rise.
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The mid-cap company has equity capital of Rs 38.67 crore. Face value per share is Rs 2.
KPIT Technologies' earnings before interest, taxation, depreciation and amortization (EBITDA) margins were 15.37% in Q3 December 2013 as compared to 15.49% in Q2 September 2013. The other income stood at Rs 1.75 crore in Q3 December 2013 as against Rs 2.31 crore in Q2 September 2013.
KPIT Technologies' revenue fell 2.3% to $109.66 million in Q3 December 2013 over Q2 September 2013. In constant currency terms, revenue was $336 million for year to date as on 31 December 2013 as against the reported $330.72 million.
The rupee was comparatively steady during Q3 December 2013. The realized rate stood at INR 61.82/ USD as compared to INR 62.61/ USD in Q2 September 2013.
KPIT Technologies said that the third quarter of the financial year is always marred by loss in billing days due to holidays. During Q3FY14 we had anticipated around three days of lost billing at the organization level. However due to extended furloughs at some of our larger customers, we lost two additional days of onsite billing resulting in unanticipated revenue loss of approximately $2 million. During the quarter our offshore revenues grew marginally but there was volume growth of around 2% in offshore, whereas a volume decline of 2% in onsite business. Overall for the quarter the volume growth was 1.2%, the company said.
Out of the total deals of $70+ million closed during the quarter, three large deals with cumulative size of $60+ million were closed late December 2013. We had expected these deals to close during the early part of the quarter and thus had considered revenue flow from these deals during Q3 and ramp-up in Q4. With the delay in closure, there were no revenues in Q3FY14 from these deals and the ramp-ups will now be pushed into FY15. New revenues for FY14 have been affected to a large extent due to this delay in closure, the company said.
The delays in large deal closures and the loss of additional billing days in Q3FY14, will impact our ability to reach the annual $ revenue guidance and we anticipate a deficit in the actual revenue for FY14 in constant currency terms as compared to the annual guidance given at the beginning of the year. On the other hand we expect to exceed the higher end of the profit guidance as we close FY14, irrespective of the fact that SAP SBU profitability will be much lower than anticipated. IES and A&E SBU have shown steady increase in margins along with steady growth, the company said.
In terms of the year to date performance by SBU, till Q3FY14, IES SBU has shown a growth of 20%+ and A&E SBU has grown by over 14%+.
As we close this financial year we expect IES to post annual growth over 20% and A&E over 15%. In all during FY14 we have faced challenge for growth in the SAP SBU, where on YTD basis there has been a decline of around 14%. This has not only affected the overall growth rate of the company but has also dented the profitability of the SBU as well as of the company as a whole. Looking forward, with a healthy order book and operational efficiency measures already in place for SAP SBU, we expect to get back to growth and positive operating margins in FY15 for SAP, the company said.
Amongst the top customer accounts, Cummins has grown by 4.68% in Q3 December 2013 over Q2 September 2013 with revenue share at 17.91% during the Q3 December 2013.
Commenting on the performance of Q3 FY14, Kishor Patil, Managing Director & CEO, KPIT Technologies said, We have closed large deals in excess of $70 million during the quarter which provides a sound platform, going into FY15. However due to the delay in the closure of the new deals, a couple of deals will start in Q4 and some later. We also experienced extended furloughs in some of our customer accounts during Q3FY14, resulting in two additional days of lost onsite billing, than expected. Thus due to the delay in project kick-off and additional loss of billing days in Q3FY14, we will be short of our annual topline guidance. The shortfall in the revenue is entirely on account of deficit in SAP SBU revenue for FY14. However on the profit number we will exceed the higher end of the guidance despite the challenges faced on SAP SBU profitability. He added, In order to get ready for the ramp-ups on these deals, we have had another quarter of strong hiring, adding around 300+ people during the quarter.
Sachin Tikekar, Board Member & President, KPIT Technologies said, During the quarter we experienced around 6 days of lost billing in SAP business leading to a sharp decline in revenues sequentially. We have closed orders worth USD 40+ million and have built a healthy pipeline in SAP and are gearing up for the ramp-ups in the coming quarters. We are relentlessly focusing on our strategic accounts and on the verticalization strategy to enable us enhance our share of wallet of the technology spending with innovative combinations of engineering and IT solutions. He added, The overall macroeconomic environment is improving with steady spending anticipated in US and APAC while Europe is looking up noticeably. We are excited about FY15 due to improved order book and our ability to considerably improve margins in FY15.
KPIT Technologies said that the company is in the midst of a transformation to get ready for the next level of growth at an increased scale. We are working towards a more resilient organization structure as we make progress toward our vision of being a $1 billion revenue company by 2017. The new organization structure will assist us in building vertical specific solutions with deeper domain and technology focus. With higher focus on mining and growing our strategic accounts, the new structure will provide us the necessary platform to grow into these accounts. This new structure will be fully implemented by the end of the current financial year, KPIT Technologies said.
KPIT Technologies said that there has been good momentum during Q3 across the business lines in terms of deal closure and pipeline building. Though in three large deals there has been almost a quarter's delay in closure, two in SAP and one in A&E, that got closed during Q3. As a result of this delay, the ramp-up on these deals will be majorly in Q1FY15 instead of Q4FY14. We will commence revenues from some of these deals in Q4FY14 and some later in Q1FY15, the company added.
The emphasis continues to improve the quality of growth from key customer accounts, annuity business, IP based revenues and large enterprise deals. We are moving ahead with the changed identity and positioning, verticalised goto-market strategy and focus on people initiatives and development, KPIT Technologies said.
KPIT Technologies is a global IT consulting and product engineering company focused on co-innovating domain intensive technology solutions for manufacturing corporations (with special focus on Automotive, Hi-Tech and Industrials verticals).
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