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KPIT Cummins Infosystems Research Report - 16th Dec 2015

IT | Published on Dec 27th 2010


KPIT Cummins Infosystems (KPIT) is a mid-tier domain-focused IT company, which is riding on the recovery of its anchor vertical, i.e., manufacturing. The company is back to reporting an 8.7% CQGR in its revenue over 2QFY2010–2QFY2011, after recording a decline of 9% CQGR over 2QFY2009–1QFY2010. We expect the company to post a revenue CAGR of 24.9% (USD terms) and 21.7% (INR terms) over FY2010–13E, with EBITDA and PAT expected to grow at a CAGR of 14.4% and 20.2%, respectively. At the CMP of Rs136, the stock is trading at attractive valuations of 9.0x FY2012E EPS of Rs15.1 and 7.5x FY2013E of Rs18.2, respectively. Over the past five years, KPIT has traded at a one-year forward median P/E(x) of 12x and in the range of 6–17x. We Initiate Coverage on the stock with a Buy recommendation, valuing the company at 9x FY2013 EPS (i.e. at ~55% discount to Infosys FY2013 target P/E) with a Target Price of Rs164.

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CMP 136
Target Price 164
Investment Period

Stock Info

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Shareholding Pattern (%)

Public & Others15.0
Grand Total100.0

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