KPIT Technologies Q3 Results: Profit And Revenue Up, FY24 Guidance Intact

KPIT Technologies Ltd. is confident of meeting its guidance for the ongoing fiscal, after earnings in the October-December quarter met analysts' estimates.

Revenue of the Pune-based autotech company rose 4.82% over the previous three months to Rs 1,257 crore, according to an exchange filing on Tuesday. That compares with the Rs 1,243.20-crore consensus estimate of analysts tracked by Bloomberg.

KPIT Technologies Q3 Results: Key Highlights (Consolidated, QoQ)

• Revenue up 4.82% at Rs 1,257 crore (Bloomberg estimate: Rs 1,243.2 crore).

• EBIT up 8.70% at Rs 208.54 crore (Bloomberg estimate: Rs 202.2 crore).

• EBIT margin up 59 basis points at 16.59% (Bloomberg estimate: 16.3%).

• Net profit up 10.85% at Rs 156.75 crore (Bloomberg estimate: Rs 149.4 crore).

One basis point is one-hundredth of a percentage point.

The company expects to grow at 37% in constant currency terms in the fiscal ending March 31, 2024, as against 27.30% estimated earlier. The operational profitability—measured as earnings before interest, tax, depreciation and amortisation—is seen in excess of 20% in FY24.

“The Q3 FY24 revenues have been in line with our expectations on the profitability front,” Kishor Patil, chief executive officer at KPIT Technologies, said in a statement accompanying the earnings. “Basis our performance so far, robust pipeline and the consistency of demand driven by new technology investments by our strategic clients, we are confident of meeting our upward revised outlook for the year.”

KPIT Technologies—an engineering research and development firm—has managed to grow its top line in a seasonally weak quarter for India's $250-billion IT services industry, which is already in the throes of a slowdown. In dollar terms, revenue rose 2.7% sequentially to $149 million in the third quarter. It was up 4.3% in constant currency terms.

The growth was led by powertrain, autonomous and connected domains, as car sales grew in the U.S. and Europe, the company said in the statement. A cross-currency impact, due to a higher mix of revenues in euro, yen and pound sterling, weighed on dollar-revenue growth.

The company's passenger vehicle vertical, which accounts for more than three-fourth of the total revenue, grew 6.15% sequentially to $116.85 million. At the same time, the commercial vehicle business dipped 10.87% to $25.90 million. Geographically, the U.S. business was nearly flat while Europe operations grew 3.19%.

What stood out, however, was operational profitability. 

KPIT Technologies' Ebitda margin in the third quarter grew to 20.6%—60 bps higher sequentially—despite fresher hiring and quarterly promotions. The expansion was driven by improved productivity, operating leverage and better realisations. Attrition rate eased further even as overall headcount increased by a net 756 employees to 12,727.

Additionally, KPIT took fewer days to convert deals into revenue, about 49, even as the pipeline remained healthy with $189 million in fresh contracts.

“We are witnessing broad-based traction across technologies, clients and sub-verticals and geographies,” Sachin Tikekar, president and joint managing director at KPIT Technologies, said in the statement. “We are increasing our strategic engagements in the quest to move towards being trusted partners for our strategic clients.”

On Tuesday, shares of KPIT Technologies rose 3.24% to Rs 1,456.05 apiece on the BSE even as the benchmark Sensex ended the day 1.11% lower at 71,139.90 points.