USD revenues grow 12% Y-o-Y to reach USD 150.54 Million
Q1FY19 operational EBITDA at 13.2% against 12.7% last quarter
Constant Currency growth of 3.5% Q-o-Q on services business
Pune, May 23, 2018: KPIT (BSE: 532400; NSE: KPIT), a global technology company specializing in providing IT Consulting and Product Engineering solutions and services to Automotive, Manufacturing, Energy and Utilities companies, today reported its consolidated financial results for the fourth quarter and fiscal year ended March 31, 2018.
Highlights for the quarter ended March 31, 2018
Q4 FY18 PAT at Rs. 760 Million, a Q-o-Q growth of 23.2%, Y-o-Y growth of 41.6%
Q4 FY18 reported EBITDA at 11.4%, Operational EBITDA without transaction expenses at 12.7%
Q4 FY18 Rs. Revenue up by 6% Q-o-Q and 12.6% Y-o-Y
Net Cash Balance as at March 31, 2018 stood at Rs. 3.18 Billion (Rs. 0.77 Billion as at March 31, 2017)
FY19 Growth Outlook of 8% - 10% in USD Revenue
Management Comments
Commenting on the performance of Q4 FY18, Ravi Pandit, Co-founder, Chairman & Group CEO, KPIT said, "We are encouraged by the revenue growth during the quarter, led by engineering and certain segments of Business IT viz. Digital and ePLM. We will continue to invest in future technologies relevant for our customers. We are progressing well on the Merger-Demerger transaction, with all regulatory filings on track."
Kishor Patil, Co-founder, CEO & MD, KPIT said, "We are back to industry leading growth, with FY18 registering a healthy growth of ~15%. We have seen reassuring margin improvement in Business IT during the year. We expect to register a growth of 8% to 10% in USD revenues for FY19 with operational EBITDA Margins in the range of 11.5% to 12.5%."
Quick Summary
The year gone by has seen us get back to industry leading growth and we are positive on continuing growth and improved profitability going ahead.
We crossed the USD 500 Million mark and ended FY 2018 with revenues of USD 567.64 Million, a Y-o-Y growth of 15%. The reported EBITDA margin for the year was 10%. We incurred around Rs. 169 Million as expenses towards the Merger-Demerger transaction during the year, of which Rs. 129 Million were incurred in Q4FY18. The operational EBITDA during the quarter and the year, thus was as follows:
Details Unit Q4FY19 FY18
Reported EBITDA Rs. Mn 1,098 3,785
Merger-Demerger Transaction Expenses Rs. Mn 129 169
Operational EBITDA Rs. Mn 1,227 3,954
Reported EBITDA Margin % 11.36% 10.33%
Operational EBITDA Margin % 12.70% 10.79%
TThe Profit for the year stood at Rs. 2.53 Billion registering a growth of 6% over last year. In FY17 we had an exceptional gain on account of sale of our functional safety business to the tune of Rs. 260.9 Million. Excluding this one-time gain in FY17, the profit for FY18 grew by 19% over FY17.
We continued to focus on Cash Generation during the year and ended the year with a gross cash balance of Rs. 6.3 Billion as compared to Rs. 4.6 Billion as of last year end. The Net Cash Position was even better at Rs. 3.18 Billion as compared to Rs. 770 Million last year end.
In terms of revenue growth, it was a year of balanced growth with good business momentum being maintained throughout the year across geographies, industry verticals and business units. Our digital business continued growing during the year while the Business IT part maintained its steady pace aided by relevant industry recognitions worldwide. Engineering business was the highest growing business during the year and there were some positive and concrete developments in our Products & Platforms business, which contributed to strong growth numbers for the year. Digital Technologies and ePLM also showed good growth during the year.
We continued with the profitability improvement measures, which led to steady and sustainable improvement in the margins, during the year.
Earlier in the year, we announced a transaction of merger and demerger involving KPIT and Birlasoft. Birlasoft is a part of the USD 1.6 billion diversified CK Birla Group.
  • The merger of KPIT and Birlasoft will create a USD 700+ Million entity which will immediately demerge into two separate companies :
    • KPIT Technologies (USD 220+ Million revenue company, post-merger), a global leader in Automotive Engineering and Mobility Solutions, which will evolve from the existing Engineering business of KPIT.
    • Birlasoft (a USD 500+ Million revenue company, post-merger), a new Digital Business IT Services company, focusing on the mid-tier IT space formed by combining Birlasoft with the KPIT's IT business
We have almost completed all the regulatory requirements of the mandatory Open Offer in KPIT pursuant to the above transaction. We are currently in the process of various regulatory filings required for the transaction to get completed and we believe we are on track for the same.
Services Update
Vertical Update
Technology Update
We have filed 6 patents during the quarter in automotive and energy domain. With this the total number of patents filed as on Q4 FY18 end stood at 58 including 53 patents with complete specifications.
We were also granted 3 patents during this quarter taking the total count of granted patents to 40. The details of granted patents in Q4 FY18 are mentioned below:
Patent Number Patent Title Country Domain
EP 2477835 Motor Assistance for a Hybrid Vehicle Based on User Input Europe Hybrid
IN292492 A System for Detecting, Locating and Tracking A Vehicle India Automotive (ADAS)
AU2015348933 Method for manufacturing a modular structure Australia Manufacturing
Customer Highlights
  • KPIT was chosen as a partner in the Connected Vehicle domain by one of the leading OEMs in the world
  • KPIT was chosen by a large global OEM for power electronics and inverter development in ePowertrain space.
  • One of the world's leading Tier1 suppliers selected KPIT for its domain expertise in Autonomous Driving space.
  • KPIT was selected by one of the world's largest multinational oil and natural gas companies for process consulting – Application Managed Services.
  • Two major commercial vehicle manufacturers and one passenger car manufacturer have chosen KPIT as a partner to provide AIS-140 related systems.
  • KPIT was selected by a SE Asian marine & offshoring engineering company for Oracle Middleware support.
  • KPIT was selected by a Fortune 500 American health care company for a JD Edwards 9.2 Upgrade.
  • A Europe-based producer of distilled beverages selected KPIT for JD Edwards AMS.
  • A North America-based manufacturer of upholstered furniture chose KPIT for SAP Managed Services
  • A company specializing within the Aerospace and Defense sector selected KPIT to support their PLM systems.
  • A European renewable energy solutions provider selected KPIT for their PLM and ALM implementation.
Other Highlights
  • KPIT has partnered with the Indian government to support the first Smart India Hackathon 2018-Hardware edition. The company will be steering the evaluation committee of the automotive and smart vehicle segment of the hackathon.
  • KPIT won multiple awards at the Dassault Systèmes 2018 Value Solutions Sales Convention Americas, held in Fort Lauderdale, Florida. KPIT was awarded ‘Key Team Win of the Year’ for work on behalf of its client, Soucy Group, a Canada based manufacturer and supplier of components for recreational, industrial, agricultural and defence vehicles.
Other Update
This morning a California jury delivered a verdict in a lawsuit that has been pending for over four years in District Court (USA). The lawsuit involved various claims brought by Copart, Inc. against Sparta Consulting, Inc., KPIT Infosystems, Inc. and KPIT Technologies Ltd., and Sparta Consulting, Inc.’s claims against Copart, Inc. While we do not yet have a copy of the jury’s written decision (the “verdict form”), what we understand from the oral proceedings in court yesterday is that the jury awarded damages to both Sparta and Copart with respect to their respective claims. We understand the net result is an amount owing to Copart, Inc. approximately US $ 16 M. The court set a further hearing on July 13, 2018, at which time the parties’ respective motions regarding the jury’s decision will be considered. After those motions are heard and considered, the court will issue its final written judgment.
Even before the jury issued its verdict, the court had previously ruled that any direct claims against KPIT Technologies Ltd. should be dismissed as a matter of law.
Sparta and KPIT Infosystems continue to vigorously deny any and all wrongdoing, and will continue to explore all possible challenges to the verdict.
Financial Update

Revenue Update

Our $ revenue for the quarter stood at $150.2 Million, a Q-o-Q growth of 6.4% and Y-o-Y growth of 17.1%. In Rs. terms revenue grew by 5.9% Q-o-Q and 12.6% Y-o-Y to Rs. 9,664.3 Million. 
Amongst SBUs, there was a significant Q-o-Q growth in P&P SBU as it grew by 50% while PES and DT SBU grew by 12% and 6.3% respectively. IES SBU grew marginally by 0.3% on a Q-o-Q basis while SAP SBU declined by 2.1%. On an annual basis for FY18, P&P SBU grew by 53.8% while PES grew by 32.3%. DT and IES SBU grew by 15.3% and 5.9% respectively. There was a marginal decline of 0.8% in SAP SBU.
Amongst geographies, APAC was the highest growing geography with 14.3% Q-o-Q growth while Europe grew by 11.2% and US grew by 2.8%. On an annual basis for FY18, Europe was the highest growing geography with 36.3% followed by APAC which grew by 28.7% and US which grew by 6.5%.
In terms of industry verticals, manufacturing grew by 9% while Automotive & Transportation vertical grew by 6.8%. There was a sequential growth of 3.8% in Energy & Utilities vertical. On an annual basis for FY18, Energy & Utilities grew by 39.4% while Automotive & Transportation vertical grew by 23%. There was a marginal decline of 2% in manufacturing vertical.
On a Q-o-Q basis our top customer grew by 6% with revenue share of 12.1%. The 20 top strategic accounts constituted 51.8% of the total revenues and grew by 8.6%. Similarly, the 40 top strategic accounts constituted 63.1% of the revenues and had a Q-o-Q growth of 9.5%.  For FY18, the top client grew by 10% while there was a growth of 32.7% and 25% in Top 20 and Top 40 strategic clients respectively.
*All the revenue growth numbers mentioned under revenue update are in equivalent $ terms.

Profitability

The realized rate for the quarter was Rs. 64.35 /$ against Rs. 64.64/$ in Q3 FY18. The offshore revenues grew faster during the quarter and employee productivity also showed a steady increase resulting in increased offshore utilization. Higher engineering revenues also resulted in a higher offshore realized billing rate during the quarter. There was an increase in the Business IT profitability during the quarter and we see it increasing steadily. We have done significant R&D and new solutions development investments both in Engineering as well as Business IT, albeit tilted more towards engineering, which had some impact on the engineering profitability for the quarter.
We will continue to focus on improving people utilization, productivity and revenue mix leading to steady improvement in operating profitability over the next year.
Cash Flow
Details Rs. Million
Cash Profit for Q4 FY18 1,016
Working Capital Adjustments 791
Cash Generated from Operations 1,807
Fixed Assets + ESOPs (297)
Balance Cash Flow 1,510
Investment in Subsidiary (Net) (97)
Debt Repayment (171)
Total Increase/(Decrease) in cash balance (1,242)
Total Net Cash balance as at Q4 FY18 end (3,178)
  • The Cash Balance as at March 31, 2018 stood at Rs. 6,266 Million as compared to Rs. 5,024 Million as on December 31, 2017.
  • The DSO were at 70 days, at the quarter end.
  • As on March 31, 2018 our total debt stood at Rs. 3,088 Million (Rs. 3,252 Million as of December 31, 2017) comprising of Rs. 970 Million of Term Loan and Rs. 2,188 Million of Working Capital Loan.
  • Thus, the Net Cash Balance as at March 31, 2018 stood at Rs. 3,178 Million (Rs. 1,772 Million as on December 31, 2017).
Income Statements
Conference call details
Conference name
:
KPIT Q1 FY2019 Conference Call
Date
:
July 26, 2018
Time
:
1600 Hours (IST)
 
Dial-in Numbers for all the participants
Primary number
:
+91 22 6280 1325/ +91 22 7115 8226
Local access Number
:
+91 70456 71221
Toll free Number
:
USA- 1 866 746 2133
UK- 0 808 101 1573
Singapore- 800 101 2045
Hongkong- 800 964 448
About KPIT Technologies

KPIT (BSE:532400, NSE: KPIT) is a global technology company specializing in providing IT Consulting and Product Engineering solutions and services to Automotive, Manufacturing, Energy & Utilities and Life Sciences companies. Together with its customers and partners, it creates and delivers technologies to enable creating a cleaner, greener and more intelligent world that is sustainable and efficient.

Forward Looking Statements

Some of the statements in this update that are not historical facts are forward-looking statements. These forward-looking statements include our financial and growth projections as well as statements concerning our plans, strategies, intentions and beliefs concerning our business and the markets in which we operate. These statements are based on information currently available to us, and we assume no obligation to update these statements as circumstances change. There are risks and uncertainties that could cause actual events to differ materially from these forward-looking statements. These risks include, but are not limited to, the level of market demand for our services, the highly-competitive market for the types of services that we offer, market conditions that could cause our customers to reduce Their spending for our services, our ability to create, acquire and build new businesses and to grow our existing businesses, our ability to attract and retain qualified personnel, currency fluctuations and market conditions in India and elsewhere around the world, and other risks not specifically mentioned herein but those that are common to industry.

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