KPIT Technologies maintainedits growth trajectory in Q2, with 4.7% q/q CC revenue growth. New TCV signed at $207m,up33% y/y, taking LTM to$859m, down 17.5% y/y, incl. mega deals in FY23. The book-to-bill of 1.2x (last 4 quarter average of 1.3x) and management talked of a strong deal pipeline with many large deals. The company plans to raise Rs28.8bn (~6% equity dilution) towards inorganic growth. The EBITDA margin declined 29bps sequentially and 82bps y/y to 20.8% after absorbing wage hikesand ESOP costs. Further, management is confident of achieving the lowerend of its revenue guidance; hence, we trim our FY25e/FY26erevenue 2.2%/3.6%. However, we see earnings improving 3% in FY25 given the one-time benefit (Rs 450m pretax) from reversal of an insurance claim.
OutlookWe introduce FY27 figures and lower our TP to Rs1,760 (from Rs2,000), based on 40x FY27e EPS. The TP revision includes Rs130/sh estimated value of the Qorix JV. The CMP reflects ~28% gains, resulting in a Buy (earlier Hold) recommendation.
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