KPIT Technologies: Heavily depended on top customers

PUNE & BANGALORE, INDIA:KPIT Technologies Ltd, a vertical focused IT services provider to automotive and transportation, manufacturing, energy and utilities corporations, today reported its consolidated financial results for the fourth quarter and year ended March 31, 2014.

The results. though not quite encouraging and as it could not register a lower end of a double-digit growth, there was some positive development on account of revenue increase among their top large customers baring Cummins.

The decline in Cummins revenue could have been due to weakness in Cummins performance and a weaker demand in FY 2014. However, their other large account beyond top five grew in their revenue contribution. The revenue growth was witness among Energy and Utility and Automotive verticals. There was a rebound in their SAP business and KPIT's SBU's like Automotive & Allied engineering.

The company though met their annual PAT guidance and giving a strong guidance for FY'15; it need to be seen whether they will have a continued growth scenario in their SAP business, BTU business revival, continued growth in IES business and organization ability to generate net profit beyond 15 pc for FY'15. KPIT also need to make a partial payout of close to $2million out of their $14 million guaranteed payment for their PLM company acquisition named I-Cubed.

The company can look at scaling back its revenue from Cummins. A faster integration of acquired entity will help them to bring-in the PLM expertise into play, which was missing earlier, and also ensuring cost rationalization and only a moderate annual employee compensation increase without any compromises on the margins in their newer deals slatted for FY'15.

Commenting on the company's performance in Q4 and FY14, Ravi Pandit, Chairman & Group CEO, KPIT said, "With a robust growth in Q4FY14 we are looking forward for revenue growth in FY15 to be 12-14pc and estimate 18-21pc growth in profits during the year. FY14 was a tough year for one of our SBUs namely SAP, excluding which we grew by 17pc over last year. FY14 has ended on a positive note for us with large deal closures and we are optimistic about growth in FY15."

(The author is senior vice president and group editor, CIOL)