Kpit Technologies EBITDA dropped on 22.4% in 2015 and EBITDA Margin decreased on 4.7 pp from 15.5% to 10.9%

28-04-2015 • About Kpit Technologies ($KPIT) • By InTwits

Kpit Technologies reported FY2015 financial results today. Overall the company's long term financial model is characterised by the following facts:

Kpit Technologies has low CAPEX intensity: 5 year average CAPEX/Revenue was 3.4%. At the same time it's in pair with industry average of 3.5%.
CAPEX is quite volatile: 5,222 in FY2015, 9,824 in FY2014, 11,215 in FY2013, 5,286 in FY2012, 6,307 in FY2011
The company has highly profitable business model: ROIC is at 12.8%

Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.

Kpit Technologies ($KPIT) key annual financial indicators

mln. INR	2011	2012	2013	2014	2015	2015/2014
P&L
Revenue	9,870	15,000	22,386	26,940	29,899	11.0%
Gross Profit	3,622	5,066
SG&A					285
EBITDA	1,614	2,166	3,642	4,183	3,244	-22.4%
Net Income	946	1,454	1,990	2,490	2,370	-4.8%
Balance Sheet
Cash	2,078	1,422	1,919	1,908	3,634	90.5%
Short Term Debt	816	1,470	2,172	3,648	4,270	17.1%
Long Term Debt	115	669	1,459	1,301	780	-40.0%
Cash flow
Capex	422	609	701	689	913	32.6%
Ratios
Revenue growth	-71.0%	52.0%	49.2%	20.3%	11.0%
EBITDA growth	-15.3%	34.3%	68.1%	14.8%	-22.4%
Gross Margin	36.7%	33.8%				0.0%
EBITDA Margin	16.3%	14.4%	16.3%	15.5%	10.9%	-4.7%
Net Income Margin	9.6%	9.7%	8.9%	9.2%	7.9%	-1.3%
SG&A, % of revenue					1.0%	1.0%
CAPEX, % of revenue	4.3%	4.1%	3.1%	2.6%	3.1%	0.5%
ROIC	19.8%	20.4%	25.8%	21.8%	12.8%	-8.9%
ROE	19.1%	22.1%	22.8%	21.5%	18.4%	-3.1%
Net Debt/EBITDA	-0.7x	0.3x	0.5x	0.7x	0.4x	-0.3x

Revenue and profitability

Kpit Technologies's Revenue jumped on 11.0% in FY2015. Revenue growth was financed by EBITDA margin decline. EBITDA Margin decreased on 4.7 pp from 15.5% to 10.9% in FY2015.

Net Income marign decreased slightly on 1.3 pp from 9.2% to 7.9% in FY2015.

Capital expenditures (CAPEX) and working capital investments

In FY2015 the company had CAPEX/Revenue of 3.1%. CAPEX/Revenue decreased slightly on 1.0 pp from 4.1% in FY2012 to 3.1% in FY2015. Average CAPEX/Revenue for the last three years was 2.9%.

Return on investment

The company operates at good ROIC (12.84%) and ROE (18.43%). ROIC decreased on 8.9 pp from 21.8% to 12.8% in FY2015. ROE decreased on 3.1 pp from 21.5% to 18.4% in FY2015.

Leverage (Debt)

Company's Net Debt / EBITDA is 0.4x and Debt / EBITDA is 1.6x. Net Debt / EBITDA dropped on 0.3x from 0.7x to 0.4x in FY2015. Debt increased on 2.1% in FY2015 while cash surged on 90.5% in FY2015.

Management team

The company's CEO is Shashishekhar Balkrishna Pandit "Ravi". Shashishekhar Balkrishna Pandit "Ravi" has 5 years tenure at the company.

Appendix 1: Peers in IT Consulting & Software

Below we provide Kpit Technologies benchmarking against other companies in IT Consulting & Software industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.

Top companies by Revenue growth, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Tech Mahindra ($TECHM)	-85.8%	6.8%	25.2%	174.0%
Tata Consultancy Services ($TCS)		31.0%	28.8%	29.9%	15.7%
Mindtree ($MINDTREE)		26.6%	23.2%	28.8%	17.0%
Infinite Computer Solutions (India) ($INFINITE)	-57.9%	19.5%	31.7%	24.6%
Infosys ($INFY)		22.7%	19.6%	24.2%	6.4%
Median (21 companies)	-39.8%	22.7%	20.4%	14.0%	11.4%
Kpit Technologies ($KPIT)		52.0%	49.2%	20.3%	11.0%

Top companies by Gross margin, %


Top	FY2011	FY2012	FY2013	FY2014	FY2015
Tata Consultancy Services ($TCS)				47.4%	42.4%
Infosys ($INFY)	45.3%	41.3%	98.1%	35.9%	38.3%
Mindtree ($MINDTREE)	32.8%	31.5%	36.2%		34.8%
Wipro ($WIPRO)	31.5%	29.2%	30.4%	32.0%	31.6%
Median (4 companies)	32.8%	31.5%	36.2%	35.9%	36.6%

Top companies by EBITDA margin, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Oracle Financial Services Software ($OFSS)	37.4%	35.3%	35.2%	37.4%
Tata Consultancy Services ($TCS)	29.9%	29.5%	28.6%	30.7%	26.1%
Infosys ($INFY)	32.5%	31.6%	27.9%	26.3%	27.1%
Wipro ($WIPRO)	21.1%	19.1%	20.9%	22.4%	22.3%
Tech Mahindra ($TECHM)	19.5%	16.7%	20.7%	22.2%
Median (18 companies)	18.0%	15.1%	17.8%	18.5%	19.1%
Kpit Technologies ($KPIT)	16.3%	14.4%	16.3%	15.5%	10.9%

Top companies by CAPEX/Revenue, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Ramco Systems ($RAMCOSYS)	16.4%		22.1%	15.3%	12.4%
Niit Technologies ($NIITTECH)	4.1%	5.9%	4.6%	6.1%
Infosys ($INFY)	4.7%	4.9%	5.2%	5.5%	4.2%
Mindtree ($MINDTREE)	5.6%	2.5%	4.5%	5.0%	5.6%
Tech Mahindra ($TECHM)	3.0%	5.4%	2.6%	5.0%
Median (17 companies)	4.0%	3.7%	3.5%	3.5%	3.1%
Kpit Technologies ($KPIT)	4.3%	4.1%	3.1%	2.6%	3.1%

Top companies by ROIC, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Tata Consultancy Services ($TCS)	47.1%	48.6%	48.4%	50.2%	40.5%
Tech Mahindra ($TECHM)	19.2%	15.4%	20.1%	43.0%
Geometric ($GEOMETRIC)	19.6%	29.9%	46.4%	41.1%	20.6%
Mindtree ($MINDTREE)	14.9%	24.9%	34.6%	36.2%	32.0%
Cmc ($CMC)	31.5%	26.2%	33.2%	35.3%	26.0%
Median (30 companies)	16.0%	19.1%	20.4%	23.2%	22.9%
Kpit Technologies ($KPIT)	19.8%	20.4%	25.8%	21.8%	12.8%

Top companies by Net Debt / EBITDA


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
3I Infotech ($3IINFOTECH)	3.5x	8.5x	20.3x	27.7x
Ramco Systems ($RAMCOSYS)	4.0x	8.8x		27.6x	4.2x
Starcom Information Technology ($STARCOM)				17.4x
Onward Technologies ($ONWARDTEC)	2.7x	2.4x	2.2x	4.1x
Tera Software ($TERASOFT)	0.7x	1.7x	1.5x	0.0x
Median (23 companies)	-0.1x	-0.1x	-0.2x	-0.3x	-0.7x
Kpit Technologies ($KPIT)	-0.7x	0.3x	0.5x	0.7x	0.4x

Kpit Technologies stock price chart

Kpit Technologies financials

mln.	FY2010	FY2011	FY2012

Revenue	34,080	9,870	15,000
EBITDA	1,906	1,614	2,166
Net income	857.3	945.8	1,454
CAPEX	237.9	422.1	609.0
Debt	1,107	930.9	2,139
Cash	784.0	2,078	1,422

About Kpit Technologies

KPIT Technologies Limited, together with its subsidiaries, provides software development, IT consulting, and product engineering solutions in India and internationally. The company offers applications services for Oracle, SAP, Movex/M3, and Microsoft products and processes, including integration, testing, and maintenance; and infrastructure management services. It also provides business consulting services, such as business process management, enterprise manufacturing management, supply chain planning and execution, and industry specific solutions; and builds and manages offshore centers of excellence across various industries, including automotive and transportation, manufacturing, and energy and utilities. In addition, the company provides product engineering services, such as research, design, and development; software designing and testing; embedded testing and diagnostics; UI and application development; verification and validation; and product support. Its product engineering solutions comprise various automotive sub-systems such as in-vehicle networking; body electronics; chassis, safety, and driver assistance systems; engineering design; functional safety; infotainment; instrument clusters; power train; and vehicle diagnostics. It serves automotive, transportation, manufacturing, energy, utilities, hi-tech, government, and defense industries. The company, formerly known as KPIT Cummins Infosystems Limited, was founded in 1990 and is headquartered in Pune, India.