KPIT Cummins
Infosystems Limited
Infosystems Limited
KPIT Cummins has declared its results for the third quarter
ending Dec,2011.Summary of their results is is given below :
REVENUES:
USD revenue growth for the quarter was
4.3% QoQ and 25.7% YoY. The constant currency growth number was around 6%. On a
like-for-like basis, USD revenue grew by 4.7% QoQ to USD 73.43 Million. Due to
more number of holidays during this quarter, there was a loss of around 2
billing days on an average across the organization. This resulted in a revenue
loss of approximately 2% of the Q3FY12 revenue. Even after this, KPIT have been
able to register strong dollar revenue growth in excess of 4%, this quarter
In INR terms, revenue has increased by 16.6%
QoQ and 43.1% YoY to INR 3,788.54 Mn, while on a like-for-like basis, the
growth was 47% YoY.
Q3FY12
|
Q2FY12 QoQ
|
Q3
FY11
|
YoY
|
||
Revenue
(INR Mn)
|
3,788.54
|
3,250.19
|
16.56%
|
2,647.02
|
43.12%
|
Adjustment
for DFS (INR Mn)
|
-
|
10.16
|
-
|
69.88
|
-
|
Adjusted
Revenue (INR Mn)
|
3,788.54
|
3,240.03
|
16.93%
|
2,577.14
|
47.01%
|
Geography-wise, US grew by
20.64% QoQ, Europe growth was 10.22% QoQ while APAC grew by 3.81% QoQ.
Among the SBUs, SAP lead
with 27% QoQ growth followed by A&E 16.5%. IES increased by 10.7% QoQ while
SSG declined by 10.5%.
KPIT see good traction in US
market for SAP business (E&U and Manufacturing verticals) as well as Oracle
and JDE Business (Manufacturing Vertical). Going forward, from geography
perspective, absolute growth would be led by US followed by APAC & Europe
During this quarter, KPIT
have added 2 new customers, taking the total number of active customers to 165.
Cummins has grown
significantly i.e. 23.4% QoQ and 38.3% YoY with revenue share at 23.92% for the
quarter. They are bullish about their business and expect to grow in spite of
the economic uncertainty in different parts of the world. They will continue to
invest in R&D and core engineering, especially in the emerging markets and KPIT
will see uptake in KPIT’S business on that front. KPIT also expect to see
gradual increase in the IT business as Cummins continues to align IT
investments to the business demands, in various parts of the world.
The ramp-ups for PACCAR
project and the other two large SAP deals won during Q2FY12 would happen from
next quarter i.e. Q4FY12 onwards.
PROFITABILITY:
For the quarter, KPIT’s Net Profit has grown by 12.6%
QoQ & 63.4% YoY to INR 410.70 Million. EBITDA for the quarter stood at INR
579.86 Million, a QoQ growth of 30.72%, while on a YoY basis it has improved by
50.43%. EBITDA margin expanded by 166 bps to 15.3%.
The net
increase in EBITDA margin was contributed by a couple of factors. On the
positive side, due to the rupee depreciation, the EBITDA margin expanded by
around 3%. On the other side due to the loss of billing the EBITDA margin
contracted by around a similar number viz. 2%. Operational Efficiencies
especially in the SAP SBU contributed to the balance increase in the EBITDA
Margins. Even with the improvement in SAP SBU, the SAP SBU EBITDA continues to
be lower than the company level EBITDA. SAP SBU share in the overall business
went up during the quarter which also negatively affected the overall EBITDA.
In terms of SBU
profitability, KPIT have been able to achieve an increase in profitability for KPIT’S
SAP SBU as current EBITDA margin stood at 8% against 5% in Q2FY12. Over last
few quarters, KPIT have made certain investments for developing SME practice
for SAP and KPIT have registered few client wins in this space. The revenue
flow from these new deals and KPIT’S endeavor to increase the offshore revenue
component by getting more Application, Maintenance & Support (AMS) business
would further help in growing the operating margins in SAP. KPIT’S margins in
the other 2 SBUs continue to be stable.
The realized
rate for the quarter was INR 51.59/$ against INR46.18/$ in Q2FY12, a growth of
11.72%.
Other Income
stood at INR 108.39 Million during the quarter as compared to INR 110.03
Million in Q2 FY12. In Q2FY12, there was a one-time income component of INR 23
Million on account of DFS business transfer. On Forex, KPIT had a gain of INR
97.62 Million this quarter against INR 77.43 Million gain in the last quarter.
The increase in forex gain in other income was due to closing rate being around
INR 53/$. The net impact of translation of foreign currency denominated assets
and liabilities resulted in the increased gain on forex, this quarter.
As KPIT move
into the next quarter KPIT have already witnessed around 7% - 8% appreciation
in the rupee as compared with the closing rate for this quarter. If the rupee
stays at this appreciated level or appreciates further then there will be a net
loss on the conversion of foreign currency denominated assets and liabilities
in the next quarter, which will have a negative impact on the overall profits
for Q4 FY12.
The effective
Tax Rate during the Quarter has been higher at around 24 % as against 20.63% in
Q2FY12. For the whole year KPIT believe the effective tax rate would be in the
range of 22% - 23%.
KPIT have added
INR 5 Million as share in SYSTIME Profit to the Profit & Loss Account
during the qtr. This was lower compared
to the profit share of Q2 FY12 particularly due to the loss of billing days in
this quarter and certain onetime expenses relating to integration and
marketing. KPIT expect the profitability in SYSTIME to improve in Q4FY12 when KPIT
will consolidate the numbers.
2.
BONUS ISSUE
KPIT are happy to announce a 1:1
Bonus Issue, subject to approval by the shareholders. KPIT have been growing at
a fast pace and are confident of the growth momentum continuing further. KPIT
also believe that KPIT are poised well to improve KPIT’S operating
profitability in the next couple of years. In the past, KPIT have been
consistently paying
dividends in the 30% to 35% range with a dividend
payout ratio of 6% - 7%. KPIT believe that KPIT should increase the dividend
payout ratio.
The last Bonus issue KPIT did was 5 years back and KPIT’S
shareholders have been demanding for a fresh bonus issue. KPIT also believe
that this bonus can provide certain additional liquidity to KPIT’S current
shareholders.
3. SBU UPDATE
The revised revenue guidance for FY12 implies an Overall Revenue Growth
between 43% - 44% on a like to like basis.
On the Profit front, KPIT will comfortably beat the higher end of the
guidance given at the beginning of the year. KPIT are confident of doing so
despite of the uncertainty in the rupee dollar exchange rate (as stated in the
Profitability section at the beginning of this update) and the negative impact
(on other income) of the appreciating rupee (as compared to the rate at the end
of Q3FY12).
RESULTS
TABLE
INCOME STATEMENT FOR THE QUARTER ENDED 31ST DECEMBER 2011
INR Mn
|
Q3 FY12
|
Q2 FY12
|
Q-o-Q
|
Q3 FY11
|
Y-o-Y
|
Adjusted Sales
|
3,788.54
|
3,240.03
|
16.93%
|
2,577.14
|
47.01%
|
Sales
|
3,788.54
|
3,250.19
|
16.56%
|
2,647.03
|
43.12%
|
Software Development Expenses
|
2,492.70
|
2,132.22
|
16.91%
|
1,706.43
|
46.08%
|
Gross Profit
|
1,295.84
|
1,117.98
|
15.91%
|
940.60
|
37.77%
|
Selling and Marketing
Expenses
|
295.37
|
255.80
|
15.47%
|
190.63
|
54.94%
|
General and Admin Expenses
|
420.61
|
418.57
|
0.49%
|
364.49
|
15.40%
|
EBITDA
|
579.86
|
443.61
|
30.72%
|
385.48
|
50.43%
|
Interest
|
15.92
|
12.85
|
23.90%
|
11.13
|
43.07%
|
Depreciation
|
133.25
|
115.54
|
15.33%
|
85.02
|
56.72%
|
Profit After Depn. &
Int.
|
430.69
|
315.22
|
36.64%
|
289.33
|
48.46%
|
Other Income
|
108.39
|
110.03
|
(1.49%)
|
13.03
|
731.97%
|
Profit Before Tax
|
539.08
|
425.25
|
26.77%
|
302.36
|
78.29%
|
Provision for Taxation
|
128.22
|
87.73
|
46.15%
|
49.33
|
159.90%
|
Profit After Tax
|
410.86
|
337.52
|
21.73%
|
253.02
|
62.38%
|
Minority Interest
|
5.30
|
1.18
|
349.02%
|
1.64
|
223.03%
|
Profit after Minority
Interest
|
405.56
|
336.34
|
20.58%
|
251.38
|
61.33%
|
Share of profit from
associate
|
5.14
|
28.44
|
(81.93%)
|
-
|
-
|
Net Profit for the period
|
410.70
|
364.78
|
12.59%
|
251.38
|
63.38%
|
Paid up Capital
|
177.05
|
176.93
|
158.94
|
||
EPS (INR 2/-Face Value each)
|
|||||
- Basic
|
4.64
|
4.14
|
12.08%
|
3.17
|
46.37%
|
- Fully Diluted
|
4.52
|
4.02
|
12.44%
|
3.05
|
48.20%
|
Common Size Analysis:
|
|||||
Gross Profit Margin
|
34.20%
|
34.40%
|
(0.20%)
|
35.53%
|
(1.33%)
|
Sales & Marketing Exp /
Revenue
|
7.80%
|
7.87%
|
(0.07%)
|
7.20%
|
0.60%
|
General & Admin Exp /
Revenue
|
11.10%
|
12.88%
|
(1.78%)
|
13.77%
|
(2.67%)
|
EBITDA Margin
|
15.31%
|
13.65%
|
1.66%
|
14.56%
|
0.75%
|
Net Profit Margin
|
10.84%
|
11.22%
|
(0.38%)
|
9.50%
|
1.34%
|
q-o-q’ or ‘sequential’ growth refers
to growth during the qtr compared to the immediately preceding quarter
‘y-o-y’ growth refers to the growth during the quarter as compared to the
corresponding quarter of the previous year
For
9 m/d Dec,2011:-
INCOME STATEMENT
FOR NINE MONTHS ENDED 31ST
DECEMBER 2011
INR Mn
|
DEC-11
|
DEC-10
|
Y-o-Y
|
||
Adjusted Sales
|
10,054.11
|
6,669.58
|
50.75%
|
||
Sales
|
10,200.03
|
6,898.46
|
47.86%
|
||
Software Development Expenses
|
6,748.90
|
4,366.53
|
54.56%
|
||
Gross Profit
|
3,451.13
|
2,531.93
|
36.30%
|
||
Selling and Marketing
Expenses
|
810.41
|
541.55
|
49.65%
|
||
General and Admin Expenses
|
1,220.10
|
901.39
|
35.36%
|
||
EBITDA
|
1,420.62
|
1,088.99
|
30.45%
|
||
Interest
|
39.12
|
34.25
|
14.20%
|
||
Depreciation
|
343.15
|
249.15
|
37.73%
|
||
Profit After Depn. &
Int.
|
1,038.35
|
805.58
|
28.89%
|
||
Other Income
|
240.87
|
(8.89)
|
-
|
||
Profit Before Tax
|
1,279.21
|
796.70
|
60.56%
|
||
Provision for Taxation
|
286.89
|
112.55
|
154.90%
|
||
Profit After Tax
|
992.32
|
684.15
|
45.04%
|
||
Minority Interest
|
9.51
|
1.64
|
479.66%
|
||
Profit after Minority
Interest
|
982.81
|
682.51
|
44.00%
|
||
Share of profit from
associate
|
33.58
|
-
|
-
|
||
Net Profit for the period
|
1,016.39
|
682.51
|
48.92%
|
||
Paid up Capital
|
177.05
|
158.94
|
|||
EPS (Rs. 2/-Face Value each)
|
|||||
- Basic
|
11.52
|
8.64
|
33.33%
|
||
- Fully Diluted
|
11.19
|
8.34
|
34.17%
|
||
Common Size Analysis:
|
|||||
Gross Profit Margin
|
33.83%
|
36.70%
|
(2.87%)
|
||
Sales & Marketing Exp /
Revenue
|
7.95%
|
7.85%
|
0.10%
|
||
General & Admin Exp /
Revenue
|
11.96%
|
13.07%
|
(1.11%)
|
||
EBITDA Margin
|
13.93%
|
15.79%
|
(1.86%)
|
||
Net Profit Margin
|
9.96%
|
9.89%
|
0.07%
|
||
* *
* E N
D * * *
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