KPIT Tech Says Order Pipeline Will Boost Long-Term Growth

[view original post]

KPIT Technologies Ltd. wants to match performance of its larger peers. And the mid-sized information technology firm’s confidence stems from its order pipeline.

It has risen to a record across geographies and segments, according to Sachin Tikekar, a board member at KPIT.

Orders from KPIT Tech’s top 25 clients grew for the fourth straight quarter in the three months through June, according to Tikekar. The company anticipates the momentum built up in the quarter ended March sustaining in the ongoing financial year too, as it’s witnessing long-term engagements with commercial and passenger vehicle makers.

Revenue grew 5% sequentially in the quarter ended June, with operating margin rising 17%.

Philip Capital expects KPIT Tech to sustain its growth. “Organic revenue growth guidance of mid-teens is easily achievable, (requiring a compounded quarterly growth rate of 1.5%), considering a strong pipeline and favourable base,” it said in a report, adding the company’s revenue contracted 10% on an annual basis in the year ended March.

The momentum could continue as the company is chasing large deals (greater than $50 million in value and over four years) in new software architecture and electrification, the brokerage said.

Tikekar said the company wants to retain its cash on books—which has been rising—and invest it wisely for the long term as opposed to higher dividend payouts. The company, he said, will also examine strategic acquisitions.