i have yet not seen the result, and i exited few quarters back.
but for quite a few quarters, this company seems promising a lot and on one or other pretext failing in execution and every time raising hopes of doing better after few quarters.
waiting period and long holding period is fine for any stock, but when it gives impression, that quarter after quarter, management does not have grip on next few quarters about how they are likely to span, it shakes my confidence.
A restructuring is happening within KPIT and a complex one to segregate their IT and Engineering Division.
Found this article - KPIT-Birlasoft – IT Company’s Restructuring written in AI instead of JAVA.
Hi,
Good to read through so many diverse comments on this thread. I will present some very broad thoughts on this theme here.
First of all, I believe this merger is a very good thing from point of view of shareholders. If you remember one of the key worries I had about KPIT were the relentless acquisitions. It almost reminded me of Lynch’s “di-worse-ification” thesis 
Now, the company is doing the exact opposite. It is bringing back focus on its strengths. For the purpose of this discussion allow me to call the automotive side of KPIT as its core business and the business IT as the non-core part,
Now KPIT is divesting its non core businesses to Birlasoft. Who runs Birlasoft? Anjan Lahiri. Anjan is the founder of mindtree, and if I recall correctly he was instrumental in turning Sasken around as well. As per this report, Sasken lost about 20% of its market cap on the day his departure.
From the same article:
“Lahiri, widely regarded as an ace salesman, started his career with Wipro Infotech in 1987. In 1999, he co-founded Mindtree with other former Wipro executives such as Krishnakumar Natarajan and Ashok Soota. Prior to his departure from Mindtree, he headed the company’s IT services business and was instrumental in winning a number of important deals from customers such as AIG, Microsoft and US-based IT firm SITA”
Now my base case is that, at the very least, the non core of KPIT will become the core of Birlasoft and with a sharp mind like Anjan at the helm, will do much better than the current situation. This benefit will be translated to current shareholders of KPIT as they will get shares in Birlasoft.
Secondly, with increased focus on the core business, KPIT will also do much better in the Auto space. I am inherently bullish on the auto software business. As electric vehicles roll on to the road, eventually driverless cars as well perhaps, the software in a car will become a big differentiating factor. It is also not a bodyshopping type of work and anyone can simply google to see the array of patents that KPIT has in this space.
An increased focus on the best performing division that is in the sweet spot of a multi year growth industry would bode well for KPIT and will not doubt be reflected in the financials over the next 2-3 years after the demerger.
This is by no means a recommendation, but just a humble attempt to put the developments into perspective.
Disc: Invested in KPIT.
Fantastic results by KPIT for 4QFY18.
KPIT reported sharply better than expected results for Q4FY18. Revenue was up 5.9% in QoQ terms to Rs966 cr, above analyst estimates of Rs926cr. Ebitda (adjusted for merger-demerger costs) was up 24.1% to Rs123 cr, and Ebitda margin expanded to 12.7% up 186bps over the last quarter (and over 250bps YoY). Pat came at Rs87cr, up 41% QoQ and well ahead of analyst estimates of Rs66cr.
More details can be obtained here:
and
It looks like the company is getting into shape ahead of its streamlining by end of year and shaping up in a very interesting way.
As mentioned in my earlier posts as well, I am invested.
Financial details of Kinetiq do not seem available in public domain as it seems a privately held company, part of Quorum Review IRB. Kinetiq seems to have sub-100 employees, though that is no indication of revenues or profits. They are primarily in Consulting business of Clinical research, regulatory compliance & human subject protection.
Q1FY19 Results are out. Numbers seem quite decent.
Revenues up 16.4% at Rs 1013.8 cr vs Rs 870.4 cr
Net profit up 41.6% at Rs 78.6 cr vs Rs 55.5 cr
EPS up 38.5% at 4.00 vs 2.89
YoY the numbers look very good, but QoQ, the numbers are flat, which is not a bad thing at all, btw! I was more interested to see the breakup of revenues into Technology/Embedded versus the traditional Application dev and Maintenance ( the part which will be merged into Birlasoft), but dont find that breakup. Note that they have spent 108M INR this quarter towards the demerger process.
Overall, decent results along expected lines and need to look for the revenue breakup of the BUs.
Their AR’s have this data, and I was hoping that given the imminent demerger, this data will also be provided this quarter on.
My bad. That data is now available on their website.
I see this stock falling sharply in the last few days / weeks … also it coincides with lot of insider selling & buying … Can anybody throw some light on what’s going on ? Is this expected in the merger - demerger cycle which is going on in KPIT or this is an indication of some looming issues ?
Thanks
Disc: Invested
@varadharajanr As on 31/03/2018, standalone sales was 1442 Cr and receivables was Rs 547.73 Cr i.e receivables day of 4.55 months, can any body explain such high level of receivables for a software company.
Is it normal, I am not raising any red flag but it definitely shows that the quality of the company.
Disclosure : Not invested, Just tracking
Does anyone have information on when will the new demerged KPIT Engineering be listed in the bourses?
Inspite the merger-demerger completed, the newly formed KPIT-Birlasoft IT business doesn’t seem to headed/managed by an experienced leadership in the IT sector. Not very optimistic after talking to a few past KPIT, now KPIT Birlasoft employees.
Discl: Not invested and above view might be myopic as has come only after talking to couple of current employees under the new leadership.
@nirajshah85
I think we must look at KPIT Technologies which is now focused on Automotive only.
Birlasoft is different and that business was not their core one.
What I see is KPIT placing it self as a specialised software company for Automobiles and transport software. This is good as they want to be niche player and focus on one thing only.
So I will like to see how the company and employees do with the newly formed KPIT.
Anyone has any views on this please share.
I honestly think KPIT tech is being unfairly ignored ever since the demerger. I’m adding it slowly in sip fashion. It’s a business for the future and isn’t adversely affected by the auto slow down… if anything it’s going to benefit from it since they have built a niche to help move the auto industry forward via electric vehicles along with r and d for the future. Based on their recent results and order book and the management commentary(I love the management too btw) I am quietly confident that they are going to be the envy of the stock market in a few years. I’m being cautious with them though… every quarter I invest around 8 percent of my planned invest based on results and commentary. Did my first trance post these latest results and will continue to do it for the next 12 quarters unless a huge red flag pops up. Everything looks good so far though… the only worry I had were the pledged shares… but they did not hit the margin call even when the share crashed recently and it reduced this quarter. Anyone else investing?
Disc: as mentioned I have a small investment in it with plans of investing the balance investment over the next 2 to 3 years.
Considering KPIT tech has been demerged would it be ok to create a new thread for it? I’m not sure if that’s allowed so thought I’d ask here first. It’s a bit of a hidden gem at present and even more hidden due to not having its own separate thread 
I totally agree with you. Automotive software is their core business and they have only few competition in Indian market ( Tata elxsi and L&T). Due to COVID Automotive OEMs will be forced to reduce cost by offshore development in low cost regions like India and I think in long term this will positively impact KPIT. They are doing really good in EU market now via their subsidiary MicroFuzzy , though small setback in US.
Yup. It’s a potential bombshell. Couple more quarters of good results(I do not doubt that this will happen though there may be a small dampener due to covid) and this will go crazy. As of now I’m using the next 2 to 3 years to accumulate it so I’m almost hoping it stays under the radar foe a while. When it starts to run it’ll run like crazy though. Everyone loves the electric and autonomous car story and once more people hear about it there won’t be any looking back
The main risk i see in this company is its promoters. Investors should always expect unexpected. I personally give more weightage on Promotors than bottomline
