KPIT Technologies Q2 results: Profit surges 69% YoY, revenue grows 60%
The latest financial report from KPIT Technologies, a software and engineering firm with a focus on the automotive industry, revealed a remarkable 69.21 percent year-on-year surge in net profit, reaching Rs 141.40 crore for the second quarter that concluded on September 30. This notable growth is particularly significant considering the current challenges faced by the IT services sector, which has been experiencing subdued expansion due to various macroeconomic uncertainties.
Furthermore, KPIT Technologies witnessed a 5.18 percent increase in net profit compared to the previous quarter. Consolidated revenue also demonstrated a robust upward trajectory, surging by 60.23 percent year-on-year and by 8 percent quarter-on-quarter to reach Rs 1,208.86 crore in the September quarter of the fiscal year 2023-24, as per the filings submitted to the Bombay Stock Exchange (BSE).
These impressive financial results indicate the company’s resilient performance and strategic positioning in the market, emphasizing its ability to navigate through the challenges prevalent in the broader economic landscape and achieve substantial growth in its key operational metrics.
Despite the prevailing trends observed among its Tier-1 IT sector counterparts, KPIT Technologies has notably defied expectations by revising its constant currency (CC) revenue growth projection for the fiscal year 2023-24 to over 37 percent, a significant increase from the previous estimate of 27-30 percent.
Correspondingly, the company also raised its Earnings Before Interest and Taxes (EBIT) margin guidance to over 20 percent, surpassing the earlier projection of 19-20 percent. This upward adjustment in performance expectations underscores the company’s robust business strategies and resilient operational capabilities, enabling it to outperform initial forecasts and set an ambitious trajectory for growth and profitability in the current fiscal year.
Despite a minor decline from the preceding quarter, KPIT Technologies maintained a strong order book of $156 million during the reported quarter, with a notable emphasis on strategic accounts. The company’s success in securing key deals was primarily driven by its dedicated focus on key segments, including the passenger car vertical, electric powertrain, autonomous driving, and digital connected solutions practices, which have played a pivotal role in bolstering its market positioning and long-term growth prospects.
Furthermore, the company demonstrated a positive uptick in its EBIT margin for the second quarter, recording a growth to 16 percent, up from 15.9 percent in the first quarter of the fiscal year 2023-24, reflecting its commitment to enhancing operational efficiency and delivering sustainable value to its stakeholders.
In the second quarter, KPIT Technologies exhibited a solid Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) margin of 20 percent, despite facing the impact of absorbing the costs associated with wage hikes during the same period. The company experienced a gross impact of 250 basis points due to the wage hikes, which was effectively mitigated by the robust growth in revenue and improvements in net realization.
Expressing his satisfaction with the company’s performance, Kishor Patil, co-founder, CEO, and Managing Director of KPIT, highlighted the consistent and robust performance the company has demonstrated over the last three years. He further emphasized that the company’s medium-term business fundamentals and growth drivers remained resilient and unchanged.
Acknowledging the prevailing geopolitical situations and the prevailing economic uncertainties across various geographies, Patil emphasized the company’s vigilance in monitoring the potential impact on its clients and their evolving business priorities. This proactive approach reflects the company’s commitment to maintaining a comprehensive understanding of the market dynamics and its dedication to supporting its clients through any challenges they may face in the current business environment.
Emphasizing the enduring commitment of their clients towards investing in emerging and pertinent technologies, Kishor Patil added that, based on the company’s strong performance thus far and the promising visibility in the near term, KPIT Technologies has decided to elevate its constant currency (CC) revenue growth projection for the fiscal year 2023-24 to a notable 37 percent and above. Furthermore, the company has also raised its EBITDA margin outlook to 20 percent and above, underscoring its optimistic outlook for sustained growth and profitability in the current financial year. This decision reflects the company’s confidence in its operational capabilities and its ability to capitalize on the increasing demand for cutting-edge technological solutions within the industry.
Furthermore, during the quarter, there was a quarter-on-quarter increase in net headcount, with the company’s workforce expanding by 400 employees to a total of 11,971 employees. This expansion in the workforce indicates the company’s efforts to bolster its human capital in alignment with its business growth and expansion initiatives.
The company’s basic earnings per share (EPS) also demonstrated a positive trajectory, increasing to Rs 5.20 for the September quarter, compared to Rs 4.95 in the preceding June quarter. This notable improvement in EPS highlights the company’s ability to generate higher profits and create increased value for its shareholders, underscoring its strong financial performance and growth prospects in the market.
