KPIT increases FY23 outlook for CC revenue growth to 31-32 percent

KPIT Q2FY2023 Performance Overview

Q2FY23 CC Revenue grows 27% YoY
FY23 CC revenue growth outlook increased to 31% - 32%

Q2FY23 Revenue

CC Revenue Growth of 27% Y-o-Y, 8.3% Q-o-Q $ Revenue Growth of 17.2% Y-o-Y and 4.8% Q-o-Q

Q2FY23 Profit

EBITDA growth of 33% Y-o-Y Net Profit growth of 28% Y-o-Y

FY23 Outlook

FY23 Organic Growth outlook increased to 23%+ against 18%-21% earlier. EBITDA margin outlook increased to 18.5%-19.0%

Deals & Pipeline

Revenue Pipeline at all time high TCV of $ 142 million won during the quarter

Q2FY2023 Performance Highlights

Sequential CC growth of 8.3% led by Digital Connected Solutions and Electric Powertrain domains. Growth led by Commercial Vehicles vertical. Higher cross currency impact. Pipeline continues to grow stronger, at all time high.

EBITDA impact of 90 bps post wage hikes in the quarter (gross impact of wage hikes ~ 300bps). Fresher additions and cross-currency headwinds impact continues. Operating efficiency, net realization improvement and revenue growth helped reduce impact on reported margins

Lower other income to the tune of ₹ 58 million (₹ 94.9 in Q2FY23 vs ₹ 152.9 in Q1FY23) on account of translation related foreign exchange losses resulting mainly from rupee depreciation/appreciation against the USD/Euro

Net Cash at quarter end stood at ₹ 9.6 billion post dividend payout. DSO at 48 days. Purchase of KPIT shares worth ₹ 220 million for ESOP Schemes by Employee Welfare Trust, during the quarter

Management Quotes

Software is at the heart of the transformation that the mobility industry is witnessing. KPIT’s position as a leader in this transformation is leading to consistency in performance and long-term visibility of growth. Q2FY23 performance has been better than expectations. We have a healthy pipeline with a couple of mega engagements expected to get closed in the coming 3-4 months. We have thus raised our FY23 growth outlook to 31%-32%. The organic growth outlook is 200+ bps higher than the higher end of the 18%-21% outlook at the beginning of the year

Kishor Patil

Co founder, CEO and MD, KPIT

Vehicle makers are investing heavily to develop Software Defined Vehicles (SDVs) of tomorrow. This calls for deep domain expertise and software competence, which KPIT brings to the table. We are seeing the result of this and thus witnessing increased traction with our Strategic Clients. The supply side constraints are gradually moving in the right direction with attrition numbers consistently on the decline. We are very excited with the addition of Technica to the KPIT family with the closing effected in October 2022.

Sachin Tikekar

President and Joint Managing Director, KPIT

Deal Wins

TCV of new engagements won during the Quarter : $ 142 million

1

A leading American Car Manufacturer selected KPIT for a multiple engagements in the powertrain domain

2

A leading European Car Manufacturer awarded KPIT a strategic engagement in the electric powertrain domain

3

A leading American Commercial Vehicle Manufacturer selected KPIT for a multiyear engagement in the powertrain domain

4

A leading Asian Car Manufacturer selected KPIT for a strategic program in the connected domain

5

A leading American Car Manufacturer awarded KPIT multiple programs in the middleware and electric powertrain domains

Financial and operational Data

Profit & Loss Account Snapshot

INR MN

DETAILS Q2FY23 Q1FY23 Q2FY22
Revenue from Operations 7,448.32 6,857.24 5,908.73
Other Income 94.90 152.89 89.37
Total Income 7,543.22 7,010.13 5,998.10
Operating Expenses 6,066.69 5,525.51 4,868.14
EBITDA 1,381.63 1,331,73 1,040.59
Depreciation 327.41 310.23 290.93
EBIT 1,054.22 1,021.50 749.66
Finance Costs 70.31 63.43 38.56
Change in FMV of Investments (1.92) 6.12 21.39
Profit Before Exceptional Items 1,076.89 1,117.08 821.86
Exceptional items – – –
Profit/(loss) of equity accounted investee 14.36 3.77 –
PBT 1,091.25 1,120.85 821.86
Tax 255.60 244.26 170.86
PAT 835.65 876.59 651.00
Profit Attributable to owners of company 834.80 854.28 651.00
Profit Attributable to non-controlling interest 0.85 22.31 –

Balance Sheet Snapshot

INR MN

ASSETS Q2FY23 Q1FY23
NON-CURRENT ASSETS
Property, Plant & Equipment 1,933.64 1,905.94
Right-of-use Assets 2,091.84 2,363.81
Other Tangible Assets 17.22 11.39
Goodwill & Other Intangibles 2,755.90 2,323.74
Other Non-Current Assets 1,484.50 1,427.25
TOTAL NON-CURRENT 8,283.10 8,032.13
CURRENT ASSETS
Inventories NIL NIL
Cash and Cash Equivalents 9,624.20 10,627.06
Trade Receivables 3,982.13 3,413.04
Other Current Assets 2,516.20 2,188.29
TOTAL CURRENT 16,122.53 16,228.39
TOTAL ASSETS 24,405.63 24,260.52
EQUITY & LIABILITIES Q2FY23 Q1FY23
Equity Share Capital 2,699.53 2,700.97
Other Equity 11,219.79 11,210.05
Equity attributable to owners 13,919.32 13,911.02
Non-controlling interests 193.13 175.32
TOTAL EQUITY 14,112.45 14,086.34
NON-CURRENT LIABILITIES
Borrowings NIL NIL
Lease Liabilities 1,483.22 1,709.83
Other Non-Current Liabilities 1,182.67 1,220.20
TOTAL NON-CURRENT 2,665.89 2,930.03
CURRENT LIABILITIES
Borrowings NIL NIL
Trade Payables 1,422.43 1,398.29
Lease Liabilities 372.66 408.45
Others 5,832.20 5,437.41
TOTAL CURRENT 7,627.29 7,244.15
TOTAL EQUITY AND LIABILITIES 24,405.63 24,260.52

Revenue Break-up

USD MN

Verticals* Q2FY23 Q1FY23 Q2FY22 Q-o-Q Y-o-Y
Passenger Cars 69.30 66.95 59.70 3.5% 16.1%
Commercial Vehicles 23.75 22.38 19.66 6.1% 20.8%
Business Units** Q2FY23 Q1FY23 Q2FY22 Q-o-Q Y-o-Y
Feature Development & Integration 64.86 61.64 56.96 5.2% 13.9%
Architecture & Middleware Consulting 12.04 12.83 9.11 (6.2)% 32.1%
Cloud Based Connected Services 17.26 15.41 14.29 12.0% 20.8%
Geography Q2FY23 Q1FY23 Q2FY22 Q-o-Q Y-o-Y
US 34.81 34.95 32.53 (0.4)% 7.0%
Europe 41.11 35.89 32.13 14.5% 27.9%
Asia 18.24 19.04 15.69 (4.2)% 16.3%

*The balance revenues come from others, which is not a big area as of now

**Feature Development & Integration – Electrification, AD-ADAS, Body Electronics and VED
Architecture & Middleware Consulting – Middleware, AUTOSAR
Cloud Based Connected Services – Intelligent Cockpit, Digital Connected Solutions and Diagnostics

P&L Metrics

Q2FY23 Q1FY23 Q2FY22 Q-o-Q Y-o-Y
Revenue by Contract Type
Time & Material Basis 53.5% 51.0% 43.7% 9.9% 43.4%
Fixed Price Basis 46.5% 49.0% 56.3% (0.6)% (3.2)%
Clients
Strategic Client Revenue 85.4% 84.9% 83.8% 5.3% 19.3%
Active Clients (Period End) 60 60 55
Revenue per Devp. Employee USD 40,569 41,951 51,910
R&D Expenditure (USD MN) 2.23 2.13 2.32
EBITDA Margin 18.5% 19.4% 17.6%
EBIT Margin 14.2% 14.9% 12.7%
PAT Margin 11.2% 12.5% 11.0%
Effective Tax Rate 23.4% 21.8% 20.8%
EPS (Basic) 3.09 3.16 2.42
EPS (Diluted) 3.06 3.13 2.39

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KPIT Technologies is a global partner to the automotive and Mobility ecosystem for making software-defined vehicles a reality. It is a leading independent software development and integration partner helping mobility leapfrog towards a clean, smart, and safe future. With 10000+ automobelievers across the globe specializing in embedded software, AI, and digital solutions, KPIT accelerates its clients’ implementation of next-generation technologies for the future mobility roadmap. With engineering centers in Europe, the USA, Japan, China, Thailand, and India, KPIT works with leaders in automotive and Mobility and is present where the ecosystem is transforming.

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