Indiainfoline research has recommended a BOOK profits / Exit KPIT after their recent management meeting. Most of the company’s clients are planning to marginally increase or maintain IT budgets in CY08 with higher offshore spending. Company expects revenues from Cummins (Top client contributing 40%) to grow in high single digits in Q3 and Q4 of FY08. Revenues from Cummins have registered a strong growth of 7.8% in Q1 and 10.6% in Q2 in rupee terms. However, company expects Cummin’s revenue share to decline to 25% by 2010.
KPIT recently became the only Indian IT company to secure me mbership of JasPar (Japan Automotive Software Platform Architecture). Business Objects was recently acquired by SAP. KPIT, on its part, intends to leverage its expertise around the BO products towards establishing a strong relationship with SAP.
KPIT might actually struggle to meet its earnings guidance for the year given the headwinds to margins. This can be a big negative for the stock, which has gone up sharply by 27% in the last few trading days. Indiainfoline has set a short-term target of Rs 126 on KPIT until Mahc-2008.