Kpit Technologies reports 34.3% EBITDA growth in 2016 and 2.7 pp EBITDA Margin growth from 10.9% to 13.5%
27-04-2016 • About Kpit Technologies (
$KPIT) • By InTwits
Kpit Technologies reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Kpit Technologies is a fast growth stock: FY2016 revenue growth was 7.8%, 5 year revenue CAGR was 26.7% at FY2016 ROIC 20.5%
- Kpit Technologies has low CAPEX intensity: 5 year average CAPEX/Revenue was 3.3%. At the same time it's in pair with industry average of 3.5%
- CAPEX is quite volatile: ₹1,513m in FY2016, ₹5,222m in FY2015, ₹9,824m in FY2014, ₹11,215m in FY2013, ₹5,286m in FY2012
- The company has highly profitable business model: ROIC is 20.5%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Kpit Technologies's Revenue increased on 7.8%. Revenue decline was accelerating on average at -12.7 pp per annum in the last 5 years. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased slightly on 1.9 pp from 11.9% to 10.0% in FY2016.
SG&A as a % of Revenue showed almost no change in FY2016.
Net Income margin increased slightly on 0.80 pp from 7.9% to 8.7% in FY2016.
Investments (CAPEX, working capital and M&A)
Kpit Technologies's CAPEX/Revenue was 3.9% in FY2016. CAPEX/Revenue increased slightly on 0.73 pp from 3.1% in FY2013 to 3.9% in FY2016. It's average CAPEX/Revenue for the last three years was 3.2%. During FY2012-FY2016 CAPEX as a % of Revenue bottomed in FY2014 at 2.6% and was growing since that time.
Return on investment
The company operates at high and attractive ROIC (20.5%) and ROE (21.0%). ROIC increased on 7.7 pp from 12.8% to 20.5% in FY2016. ROE increased on 2.6 pp from 18.4% to 21.0% in FY2016.
Leverage (Debt)
Company's Net Debt / EBITDA is -0.3x and Debt / EBITDA is 0.6x. Debt dropped on 50.1% while cash increased on 8.7%.
Kpit Technologies has no short term refinancing risk: cash is higher than short term debt (466.1%).
Management team
The company's CEO Shashishekhar Balkrishna Pandit "Ravi" has spent 7 years with the company.
Financial and operational results
Kpit Technologies ($KPIT) key annual financial indicators| mln. INR | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 15,000 | 22,386 | 26,940 | 29,899 | 32,243 | 7.8% |
| Gross Profit | 5,066 | | | | | |
| SG&A | | | | 285 | 369 | 29.8% |
| EBITDA | 2,166 | 3,642 | 4,183 | 3,244 | 4,358 | 34.3% |
| Net Income | 1,454 | 1,990 | 2,490 | 2,370 | 2,815 | 18.8% |
Balance Sheet
|
|---|
| Cash | 1,422 | 1,919 | 1,908 | 3,634 | 3,948 | 8.7% |
| Short Term Debt | 1,470 | 2,172 | 3,648 | 4,270 | 847 | -80.2% |
| Long Term Debt | 669 | 1,459 | 1,301 | 780 | 1,673 | 114.5% |
Cash flow
|
|---|
| Capex | 609 | 701 | 689 | 913 | 1,246 | 36.4% |
Ratios
|
|---|
| Revenue growth | 52.0% | 49.2% | 20.3% | 11.0% | 7.8% | |
| EBITDA growth | 34.3% | 68.1% | 14.8% | -22.4% | 34.3% | |
|
|---|
| Gross Margin | 33.8% | | | | | |
| EBITDA Margin | 14.4% | 16.3% | 15.5% | 10.9% | 13.5% | 2.7% |
| SG&A, % of revenue | | | | 1.0% | 1.1% | 0.2% |
| Net Income Margin | 9.7% | 8.9% | 9.2% | 7.9% | 8.7% | 0.8% |
| CAPEX, % of revenue | 4.1% | 3.1% | 2.6% | 3.1% | 3.9% | 0.8% |
|
|---|
| ROIC | 20.4% | 25.8% | 21.8% | 12.8% | 20.5% | 7.7% |
| ROE | 22.1% | 22.8% | 21.5% | 18.4% | 21.0% | 2.6% |
| Net Debt/EBITDA | 0.3x | 0.5x | 0.7x | 0.4x | -0.3x | -0.8x |
Peers in IT Consulting & Software
Below you can find Kpit Technologies benchmarking vs. other companies in IT Consulting & Software industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Ramco Systems ($RAMCOSYS) | 9.3% | 7.3% | 9.9% | 37.0% | - |
| Cyient ($CYIENT) | - | 20.6% | 17.8% | 24.0% | 13.1% |
| Empower India ($EMPOWER) | -3.7% | -13.2% | -32.6% | 23.9% | - |
| Hexaware Technologies ($HEXAWARE) | 34.3% | 17.3% | 13.0% | 21.0% | - |
| Tech Mahindra ($TECHM) | 6.8% | 25.2% | 174.0% | 20.1% | - |
| |
|---|
| Median (22 companies) | 16.5% | 20.4% | 13.5% | 7.2% | 13.1% |
|---|
| Kpit Technologies ($KPIT) | - | 49.2% | 20.3% | 11.0% | 7.8% |
Top companies by Gross margin, %
| Top | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Tata Consultancy Services ($TCS) | - | - | 47.4% | 42.4% | 43.9% |
| Infosys ($INFY) | 41.3% | 98.1% | 35.9% | 38.3% | 37.4% |
| Mindtree ($MINDTREE) | 31.5% | 36.2% | - | 34.8% | 32.4% |
| Wipro ($WIPRO) | 29.2% | 30.4% | 32.0% | 31.6% | 30.4% |
| |
|---|
| Median (4 companies) | 31.5% | 36.2% | 35.9% | 36.6% | 34.9% |
|---|
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Oracle Financial Services Software ($OFSS) | 35.3% | 35.2% | 37.4% | 39.7% | - |
| Infosys ($INFY) | 31.6% | 27.9% | 26.3% | 27.1% | 27.1% |
| Tata Consultancy Services ($TCS) | 29.5% | 28.6% | 30.7% | 26.1% | 28.2% |
| Wipro ($WIPRO) | 19.1% | 20.9% | 22.4% | 22.3% | 21.1% |
| Mindtree ($MINDTREE) | 15.1% | 19.8% | 20.6% | 20.3% | 17.7% |
| |
|---|
| Median (25 companies) | 15.1% | 17.8% | 18.5% | 14.2% | 15.6% |
|---|
| Kpit Technologies ($KPIT) | 14.4% | 16.3% | 15.5% | 10.9% | 13.5% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Ramco Systems ($RAMCOSYS) | - | 22.1% | 15.3% | 12.4% | - |
| Niit Technologies ($NIITTECH) | 5.9% | 4.6% | 6.1% | 7.9% | - |
| Financial Technologies (India) ($FINANTECH) | 8.9% | 11.4% | - | 6.5% | 5.4% |
| Mindtree ($MINDTREE) | 2.5% | 4.5% | 5.0% | 5.6% | 3.4% |
| Tech Mahindra ($TECHM) | 5.4% | 2.6% | 5.0% | 5.0% | - |
| |
|---|
| Median (20 companies) | 3.7% | 3.5% | 3.5% | 3.1% | 3.4% |
|---|
| Kpit Technologies ($KPIT) | 4.1% | 3.1% | 2.6% | 3.1% | 3.9% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Tata Consultancy Services ($TCS) | 48.6% | 48.4% | 50.2% | 40.5% | 44.4% |
| Hexaware Technologies ($HEXAWARE) | 33.5% | 39.2% | 34.7% | 35.7% | - |
| Mindtree ($MINDTREE) | 24.9% | 34.6% | 36.2% | 32.0% | 28.9% |
| Sqs India Bfsi ($SQSBFSI) | 12.1% | 27.0% | 29.4% | 30.6% | - |
| Tech Mahindra ($TECHM) | 15.4% | 20.1% | 43.0% | 29.7% | - |
| |
|---|
| Median (30 companies) | 19.1% | 20.4% | 23.2% | 20.8% | 17.2% |
|---|
| Kpit Technologies ($KPIT) | 20.4% | 25.8% | 21.8% | 12.8% | 20.5% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| 3I Infotech ($3IINFOTECH) | 8.5x | 20.3x | 27.7x | 14.7x | - |
| Ramco Systems ($RAMCOSYS) | 8.8x | - | 27.6x | 4.2x | - |
| Onward Technologies ($ONWARDTEC) | 2.4x | 2.2x | 4.1x | 1.9x | - |
| Mphasis ($MPHASIS) | -0.1x | 0.2x | - | 0.2x | - |
| Geometric ($GEOMETRIC) | 0.1x | -0.0x | -0.2x | 0.0x | - |
| |
|---|
| Median (23 companies) | -0.1x | -0.2x | -0.3x | -0.4x | -0.2x |
|---|
| Kpit Technologies ($KPIT) | 0.3x | 0.5x | 0.7x | 0.4x | -0.3x |
