KPIT Cummins Infosystems:
Company reported revenue of Rs1.51b (exp: Rs1.55b), – up 1.3% QoQ and 29% YoY; in US$ terms, revenue was US$37m – up 4.3% QoQ and 42% YoY. While net profit at Rs141m was also below expectation (Rs144m). This makes full year guidance challenging for the company.
Management expects to meet revenue guidance comfortably (US$145-148m) while for net profits, company hopes to meet lower end of guidance (Rs630m). In worst case of INR appreciating further to Rs38/USD, company expects to make profit of at least Rs.610m. Our estimate for FY08 was already at Rs557m.
KPIT gets just 7% of its revenue from BFSI sector where most of the investor concerns are centered. Also, ATS (auto-electronics and semiconductor) continue to show strong
traction – revenue from this segment has grown over 100% YoY during 9M08.
HTML’s 3QFY08 profit growth of 9.8% yoy was 8% below our estimates, though EBITDA margins fared much better than expected. Declining raw material cost (newsprint) and stabilising employee expenses resulted in 71bps EBITDA margin expansion, despite investments in new ventures like Mint.
Advertising revenues grew 17.6% yoy, driven by 30% growth for Hindi newspaper, though English advertising seems to be slowing. HT Media is still largely dependent on its
flagship English newspaper ‘Hindustan Times’ Delhi edition for its advertising revenues (we estimate about 65%) and any increase in competitive intensity / slowdown in market in Delhi could hamper growth. The stock appears to be fully valued.