KPIT's Net Profit Zooms by 69 per cent in Q2

KPIT is a global technology company which specializes in providing IT Consulting and Product Engineering solutions and services to Automotive, Manufacturing, Energy & Utilities and Life Sciences companies, recently reported its consolidated financial results for the second quarter and half year ended September 30, 2015.

The Dollar Revenue stood at USD 12.46 crore and posted 5.3 per cent Q-o-Q growth. In Rupee terms, revenue grew by 7.1 per cent Q-o-Q to Rs 812.25 crore. Employee benefit expense rose by 1.32 to Rs 454.5 crore q-o-q basis. The total expenses rose marginally  by 1.86 per cent to Rs 715.7 crore on sequential basis. EBITDA Margins improved by 441 basis points to 14 per cent after absorbing wage hikes. Other income was reduced by 18.74 per cent to Rs 86.21 crore, finance costs reduced by 6.52 per cent to Rs 44.19 crore on quarterly basis. Tax expenses increased by 49.4 per cent to Rs 25.63 crore. KPIT's PAT stood at Rs 75.09 crore against Rs 44.41 crore, grew by 69.07 per cent Q-o-Q basis.

Profitability improvement was the number one priority for KPIT from the last 6 months. KPIT has made progress in the areas of Span of Control, People Pyramid, Fresh Graduate hiring, long tail customers and people utilization. Majority of the benefit on account of people related actions was reflected in the Q2 numbers. KPIT is expecting some additional benefit in the next quarter also.

During H1, the company restructured its employee pyramid, KPIT reduced 321 employees, and added 170 fresh graduates in Q1 and 415 in Q2. Hence, the pyramid at the end of H1 was much better as compared to the one at the end of Q4FY15. People reduction and pyramid correction, led to gross margin expansion. So the margin expansion in Q2 is sustainable. The company will more work on people productivity improvement and that will be a major focus area in H2.

Commenting on the performance of Q2 FY16, Ravi Pandit, Co-founder, Chairman & Group CEO, KPIT said, “The focus on profitability improvement over the last 6 months is showing good results, as we improved Q2FY16 EBITDA to 14%, despite wage hikes during the quarter. We will continue to work on profitability, predictability, people and growth during the remainder of the year, to further improve the operating metrics." He added, “We are also investing in front-end account management and domain expertise to help holistically address our strategic customers.”

The FII holdings of KPIT rose by 94 basis points to 30.10 per cent, DII holdings reduced by 209 basis points to 5.64 per cent as on 30th September 2015. Yesterday, the KPIT stock prize closed at Rs 123.35, up by 0.33 per cent.