Anand Rathi 's research report on KPIT Technologies
At $76.9m, KPIT reported flat quarter (up 0.1%q/q, 8%y/y). It lost 1.5% in revenue on account of Covid-19 this quarter. The EBIT margin came at 8.5%, up 28bps q/q, down 82bps y/y. The company continued to strengthen its balance sheet, ending FY20 with high, `3,278m, net cash. Despite Q4 being better than expected, auto/engineering is seeing headwinds ahead, with management talking of up to a 15% drop in Q1 revenues. We cut our FY21e/FY22e revenues 15%, resulting in a lower target of `85 (`100 earlier) at 13x FY22e EPS.
Maintaining a Buy, at a lower TP of `85 (9x FY22e). The stock trades at 7x FY22e EPS, attractive given the anticipated H2 FY21 recovery we are building in. From a macro perspective, recovery in Germany and China are important factors for KPIT. Promoter pledges are expected to be cleared in the next 24 months.
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