KPIT Cummins continues the growth momentum
Revenue growth at 32.3% y-o-y & 3.83% sequential Jumpstarts F&A BPO business through partnership with Cummins with a 55+M USD deal
Tweet-- KPIT Cummins Infosystems Ltd (BSE: 532400; NSE: KPIT), an IT, engineering and BPO partner of first choice for its global customers , today announced its results for the quarter ended June 30th, 2007, showing robust growth in all major markets and practice areas-especially Automotive Electronics & Semiconductor Solutions.
Robust Topline Growth
Total revenues for Q1FY08 were Rs. 1352.917 Million, reflecting a 32.30% growth over the revenues in same quarter last fiscal and 3.83% growth over the revenues of previous quarter. In USD terms, revenues over the last quarter grew by 5.4%.
Profits grow 22.59% yoy; Rupee appreciation + Wage rise bring margins under pressure
For Q1 FY08, the Company earned a Net Profit of Rs. 126.8 Million, a growth of 22.59% over the corresponding quarter in the previous fiscal but profits were lower by 9.77% over the preceding quarter-owing to rupee appreciation against the US Dollar & annual wage increments during this quarter.
Highlights of the Quarter
- Total Revenue for the quarter, Q1 FY08, grew by 32.3% y-o-y to Rs. 1352.917 Mn while Profits for the quarter grew by 22.59% y-o-y
- Offshore revenues grew by 44.78% over the same quarter previous year
- 3.83% Sequential revenue growth in Rupee terms & 5.4% in USD terms
- KPIT Cummins to expand partnership with Cummins in F&A BPO area—this deal will jumpstart the F&A BPO business. Expected revenues about 55+M USD over next 5 years.
- 7 new customers added during the quarter: 6 in Manufacturing & 1 in Diversified Financial Services vertical, total # of active customers goes to: 97
- 1 STAR Customer (Automotive) added during this quarter taking the total to 18
- # of employees added during the quarter is 345 taking the total number to 3601
F&A BPO to be one more growth driver for KPIT Cummins
KPIT Cummins also announced today, that it has reached an understanding to partner with Cummins Business Services (CBS) for delivering F&A (Finance & Accounting) Services to Cummins. KPIT Cummins will benefit from the domain knowledge of global F&A systems and processes at CBS which it plans to take to other customers. This deal significantly strengthens KPIT Cummins’s positioning in the F&A BPO services market for the Manufacturing vertical. KPIT Revenues from this partnership are expected to be USD 1+ Million in the first full year with a potential to grow into a USD 15 Million BPO business annually in 60 months. This deal will generate about 55+M USD revenues over next 5 years. KPIT Cummins believes that a 5 year opportunity size of 90+M USD is available in this F&A space including business from non-Cummins customers. A separate joint press release giving details of this partnership is being issued along with this note.
Ravi Pandit says: Robust growth to continue; long-term outlook very positive
Commenting on the results, Mr. Ravi Pandit, Chairman and Group CEO, KPIT Cummins said, “This quarter witnessed a robust growth in revenues. However quarterly margins have taken a hit due to rupee appreciation and salary increments. Our fundamentals continue to be very strong and Cummins Business Services partnership in the area of F&A BPO adds one more strong scalable offering to our portfolio for the Manufacturing vertical. We look forward to consistent growth in quarters to come”
Kishor Patil: Bullish on key practice areas: Automotive, Semiconductor & F&A BPO
Expressing his views on the quarterly performance, Mr. Kishor Patil, CEO & MD, KPIT Cummins said, “All markets demonstrated predictable growth this quarter. We see good traction for Automotive & Semiconductor solutions as we continue our march to become the leader in this space. In last quarter, we added 3 marquee customers in Automotive & 2 in Semiconductor. We have 3 sizeable deals in Automotive expected to close in next 4-6 months. Pricing is stable with upward bias. Our 55+M USD F&A BPO partnership with Cummins is one more step in our endeavor to become partner of first choice for our global customer base”
Girish Wardadkar: Excellent Operational readiness for coming quarters
Mr. Girish Wardadkar, President & Executive Director said, “Last quarter we ramped our middle management by 250+ lateral hires globally. This coupled with our annual pay hike of 17% contributed to lower than expected margins. However our attrition has reduced to 18% from 20+% in previous quarter and utilization has marginally decreased from 71.4% to 71%. We are operationally in very good shape to fulfill the rising demand over next few quarters. ”
Guidance
In light of the prevalent Rupee-USD exchange rate situation, KPIT Cummins has decided to revise its full year guidance as follows.
Topline guidance in USD terms has been increased from 143.02-143.72 M USD to 145-148 M USD
PAT guidance in Rupee terms has been decreased from Rs. 700M-730 Mn to Rs. 630 M-680 Mn
Notes to Editor
About KPIT CumminsA rising star on the horizon and a niche specialist partner for the Automotive, Semiconductor & F&A BPO market , KPIT Cummins was recently chosen as a leader in global outsourcing (#38) by International Association of Outsourcing Professionals (May 07).
Formed in 1990, KPIT Cummins is a 103+M USD (FY 06-07 Revenues), 3500+ people company with global foot-print serving Manufacturing & Financial Services verticals from its offshore centers in India and a near-shore European facility in Poland.
Ranked by Deloitte among the Fastest 50 companies in India and Fastest 500 companies in Asia-Pacific,( November 06)KPIT Cummins endeavours to be the leader for advanced technology solutions/ services in Automotive Electronics & Semiconductor area by partnering with 50+ global OEMs/ODMs (Original Equipment Manufacturers & Original Device Manufacturers) and their suppliers to bring products faster to the market. Its Enterprise IT & BPO services offering helps customers globalize & streamline processes & systems better & faster.
Through a focused business model, KPIT Cummins has demonstrated robust (56+% CAGR over last 5 years) growth over several years. Strategic partnerships with leading corporations like Cummins, Cargill Ventures & Lehman Brothers are a testimony to this sound business model & predictable growth potential.
KPIT Cummins has been recognized by the Institute of Company Secretaries of India for demonstrating excellence in Corporate Governance.