See FY14 revenue between USD 465-475mn: KPIT Cummins

After posting robust numbers in Q4FY13, Ravi Pandit, chairman and chief executive officer, KPIT Cummins is hopeful that the company will earn dollar revenue of USD 465-475 million in FY14.

However, he cautioned that the first two quarters of the year are likely to be a little soft, but the company should be able to perform well in the next two quarter, he said in an interview to CNBC-TV18. The company's consolidated net profit increased marginally to Rs 51 crore in January-March quarter from Rs 50.4 crore in previous quarter and its dollar revenue grew by 2 percent Q-o-Q to USD 105.5 million in fourth quarter. The stock gained nearly 4 percent on Tuesday on the back of the positive numbers at 11:04 IST. Below is the edited transcript of Pandit’s interview to CNBC-TV18. Q: You have given guidance of dollar revenues going up 14-16 percent next year. What is that predicated on? A: Our main core sector – automotive embedded has shown good growth and we believe it will continue to show good growth. We are seeing good growth in Asia Pacific and we are also seeing growth in Oracle avenues especially in JD Edwards in the US. So, they are predicated on the growth of automotive embedded which is electronics in the automotive and it is also predicated on the basis of the JD Edwards growth all over the world. Q: While 14-16 percent is a respectable guidance, you did so much more in the previous year that your investors might have thought that you might give guidance of 20 percent plus. Any reason why you have tempered down your growth expectations from last year? A: If you look at our company over the last few years, every year we begin with a certain guidance about which we feel very confident and we normally relook the guidance at the end of three quarters. So, hopefully we should do better than this but we would rather look at something which we are very confident about today. Q: What kind of visibility do you have from Cummins for FY14? A: We expect the first two quarters of the year to be a little soft. The next two quarters should be reasonably good, so we are basing ourselves on that. Q: For FY13 your blended margin for the full year was just above 16 percent. In the profit projection that you are giving for FY14 what kind of EBITDA margin profile are you assuming? A: If one were to look at our EBITDA margins he would notice that they are different depending on the different strategic business units (SBUs). Our automotive embedded SBU has a very strong EBITDA margin in excess of 20 percent. We expect it to continue to be in that range. Our Oracle SBU has something like 16-18 percent margins and we expect that to stay like that. Our problem on the margin has so far been on SAP SBU which this quarter had zero or a bit negative margin, we expect that to come back up during this year. So, our overall margin predication, we expect that it will go from about 16.2 percent to about 50 bps more during the next year. Q: So it should be broadly between 16.5 and 17 percent for FY14? A: That is true but with a very wide variation amongst the three SBUs. Q: What is the biggest driver of revenue for FY14 which could potentially take your dollar revenue growth to well over 16 percent? A: Our main drivers of growth are our automotive embedded which is a very highly specialised technology driven area. Even in this quarter we have grown by about 9 percent in the automotive embedded area. We expect that to continue and that is really based on the new cleaner vehicles, more electronic in vehicles, better safety. These are the areas in which we work and we are at the cutting edge globally in these areas. So, we expect that growth will continue. We also expect substantial investments all over the world in JD Edwards which is what is giving us quite a good growth. Lastly, growth in Asia Pacific too should be extremely extremely good growth drivers and should give us the growth that we are targeting for.