IT company KPIT Technologies was on track to beat its FY23 growth outlook. The KPIT stock was at a 52-week high of 812.80 on Thursday and closed 6.11% at787.50 on the BSE.
KPIT CFO Priya Hardikar said they would beat the yearly guidance. “We are bullish about beating the existing guidance and we will be in excess of 33%, including Technica (acquisition) and an organic growth of 24% versus 18-20% guidance we gave at the beginning this year,” Hardikar said. KPIT works with the automotive and mobility industry for accelerating the transformation towards software-defined vehicles (SDVs).
Kishor Patil, co-founder, CEO and managing director, KPIT, said the Q3FY23 performance had been better than expectations. The healthy pipeline and demand driven by client investments in SDV gave them confidence of beating our FY23 growth outlook.
KPIT’s net profit during the December quarter grew by 43.5% and, for the first time, crossed the Rs 100-crore quarterly profit mark during the December quarter. The rise in profits was driven by both organic growth and also on consolidation of the KPIT acquisition of Technica Engineering made in the second quarter of FY23. This was the first quarter KPIT consolidated Technica Engineering fully. Organic growth was led by middle-ware and architecture consulting and the passenger car vertical was at 24.6%. They started the year with an outlook of 18-20% growth.
This was the tenth consecutive quarter of revenue and the Ebitda growth with Ebitda during the December quarter at 18.5%. The company’s constant currency revenues during the December quarter grew 44.7% year-on-year to `917.11 crore.
With Technica, the share of KPIT revenues from Europe during the quarter had gone to 45%. Europe was stabilising and clients were upbeat about investment in R&D and software defined vehicles, she said. “We don’t see any sluggishness or any slowdown in investments across Europe and America,” Hardikar said.
During the December quarter, the company announced a mega $100-million-plus SDV deal with Renault Group for their 2026 programme. They also deepened the engagement with clients and accelerated work with OEMs on their production programmes which aided growth. The total contract value of new engagements won during Q3FY23 was worth $272 million.
KPIT was growing and deepening business with its top 25 clients. Around 81% of the business came from these clients and there was potential to double business with them, Hardikar said. Margins improve because you get economies of scale there. In an industry with niche players dominating, entrenching deeper with clients leads to reduced competition and goes beyond RFP and purchase orders, she said. These are not hourly or time-based engagements but fixed price contracts, accounting for more than 50% of the engagements and they were part of the OEM’s journey into the future and 2026-29 production programmes, she said. They had an early mover advantage and it would be difficult for large companies to enter this business easily. SDV is a very complex programme. Today, 70% of a vehicle’s cost is hardware and 30% is software but this gets reversed in an SDV with software going to account for 70% which will be a dramatic shift, Hardikar said.
KPIT strength was at 10,490 and attrition had come down to mid-teens. Attrition for the first time dropped by 3% and expect lower attrition in the next quarter.