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KPIT Technologies reports strong Q2FY24 results and raises guidance

Oct 31, 2023

By: BlinkX Research Team

KPIT Technologies, a leading IT and engineering solutions provider, has announced its Q2FY24 results, which exceeded expectations and showcased a positive outlook. The company's performance in this quarter reflects its commitment to growth and innovation.

Impressive Revenue and EBITDA Growth
In Q2FY24, KPIT Technologies achieved a remarkable revenue growth of 9.3%, outperforming media Consensus estimates by 4%. The company's EBITDA also displayed significant growth, with a 9.0% increase, exceeding expectations by 9%.

Steady EBITDA Margins
Notably, the company maintained its EBITDA margins within the 20.0% range, even in the face of a 250 basis points gross margin impact stemming from wage hikes implemented during the quarter. This resilience in margins suggests a positive outlook for the underlying business, further reinforced by an improvement in net realization, with a 5% quarter-on-quarter increase in revenue per development employee.

Raised Guidance and Strong Order Book
Buoyed by the positive results and confident in its prospects, KPIT Technologies raised its guidance for fiscal year 2024. The company now anticipates revenue growth of 37% or more in constant currency, a significant increase from the previous range of 27% to 30% year-on-year. Similarly, the EBITDA margin guidance has been raised to 20% or more, up from the prior range of 19% to 20%.

One of the key drivers of this optimism is the company's robust order book, reflected in a 2x Book-to-Bill ratio over the past four quarters. KPIT's consistent ability to secure new business is evident in its recent wins, with deal values totaling US$156 million compared to US$145 million in Q1FY24. The company also saw a 3.5% quarter-on-quarter increase in headcount, which is significant because all the leaders in the industry have had to reduce headcounts.

Promising Opportunities Ahead
Furthermore, KPIT Technologies has several large middleware deals in its pipeline, each representing opportunities of US$100 million or more. These potential deals could act as significant catalysts, potentially exceeding medium-term consensus growth estimates.