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Last Updated : Oct 23, 2015 05:11 PM IST | Source: Moneycontrol.com

KPIT Tech Q2 profit jumps 69% on strong EBITDA margin

"Focus on profitability improvement over last 6 months is showing good results, as we improved Q2FY16 EBITDA to 14 percent, despite wage hikes during the quarter," Ravi Pandit, co-founder, chairman & group CEO, KPIT said.

 
 
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Software services provider KPIT Technologies has reported excellent performance in July-September quarter with profit rising 69 percent sequentially to Rs 75.08 crore on strong improvement in operating profit performance.


"Focus on profitability improvement over last 6 months is showing good results, as we improved Q2FY16 EBITDA to 14 percent, despite wage hikes during the quarter," Ravi Pandit, co-founder, chairman & group CEO, KPIT said.

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"We will continue to work on profitability, predictability, people and growth during the remainder of the year, to further improve the operating metrics," he added.


Also read - Margins to improve 300-400 bps in 12-18 months: KPIT Tech

Revenue rose 7.1 percent quarter-on-quarter to Rs 812.25 crore and dollar revenue grew by 5.3 percent to USD 124.57 million in the quarter gone by. "Performance has been satisfactory with good growth in Engineering and SAP," Kishor Patil, Co-founder, CEO & MD said.


Operating profit (earnings before interest, tax, depreciation and amortisation) spiked 57.1 percent to Rs 113.24 cr and margin expanded by 444 basis points to 13.94 percent in quarter ended September 2015 despite wage hikes.


The IT company said increase in EBITDA margin can be contributed to qualitative revenue growth, improved people metrics (utilization, people pyramid, span of control at middle level), and better average INR/USD rate for the quarter. Positive impact of rupee depreciation on EBITDA margin was around 60 bps to 70 bps during the quarter, it added.


KPIT hiked wages during the quarter, averaging 8 percent for offshore and 2 percent for onsite employees. Gross impact of wage hikes during the quarter was in range of 200 bps to 225 bps.


"Though there will be some impact due to lower billing days in Q3, we are confident about sustainability of the operating performance and intend to improve further in the coming quarters," Kishor Patil said.


The company said it made progress in areas of span of control, people pyramid, fresh graduate hiring, long tail customers and people utilisation, adding majority of benefit on account of people related actions was reflected in the Q2 numbers. "We will get some additional benefit in the next quarter also, it said.
             
Growth was not a major focus area in H1 and will be the main focus area in H2FY16, KPIT said in its filing.


It has cash balance of Rs 440.24 crore at end of September quarter compared to Rs 351.36 crore in June quarter and total debt was Rs 447.84 crore.


KPIT sees automotive vertical as one of the fastest growing verticals for company in years to come. Automotive vertical contributed 37.32 percent of total revenues during the quarter, depicting a sequential growth of 7.65 percent.


Manufacturing vertical contributed 33.25 percent of total revenue, reflecting a marginal sequential decline of 0.4 percent. Energy & utilities vertical, which contributed 21.26 percent of total revenue, grew by 21.88 percent on sequential basis and digital revenue was 12 percent of total revenue during the quarter.


At 11:16 hours IST, the scrip of KPIT Technologies was quoting at Rs 136.80, up Rs 13.45, or 10.90 percent on the BSE.



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First Published on Oct 23, 2015 10:12 am
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