Motilal Oswal ‘s research report on KPIT Technologies
KPIT’s 2QFY19 revenue grew 2.9% QoQ CC (our estimate: +2.7%), led by strength in Engineering, partly offset by weakness in IT Services. EBITDA margin expanded 150bp QoQ to 13.6% (130bp beat), aided by operational efficiencies, a change in business mix and INR depreciation. Despite the strong operational beat, PAT growth of 6% QoQ (to INR876m) trailed our estimate of +19% due to higher depreciation and lower other income.
Outlook
Our combined value of the two businesses sums up to INR275/share, leaving an upside on the table, assuming the deal goes through as anticipated. We, thus, upgrade our rating on the stock to Buy.
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