KPIT Cummins Infosystems gallops anticipating tie-up in auto-electronics

The mid-cap IT scrip KPIT Cummins Infosystems jumped nearly 10%, to Rs 460.50, amid media reports that it will announce a tie-up in the auto electronics space today. As many as 1.5 lakh shares changed hands in the counter on BSE. The stock has seen a solid run up recently. From Rs 349.90 on 15 September, it has risen 31.6% in a short while. The current price of Rs 460.50 discounts its Q1 June 2006 annualised EPS of Rs 27.80, by a PE multiple of 16.5.

As per reports, KPIT Cummins Infosystems is likely to announce a tie-up with Japan's Renaissance. The tie-up is likely to be in the auto electronics space.

KPIT Cummins Infosystems is a Pune-based, mid-sized IT company, focussed on two verticals - manufacturing and banking/finance/insurance. Following amalgamation of Cummins Infotech, KPIT Cummins Infosystems has garnered a key client in Cummins Inc, and has strengthened its presence in the market for the manufacturing vertical.

At the time of announcing Q1 June 2006 results, KPIT Cummins had reiterated its earlier guidance for FY 2007 (year ending 31 March 2007). As per its guidance, revenue for FY 2007 are expected to be in the range of $ 98 million (Rs. 436.1 crore) to $ 102 million (Rs. 453.9 crore), representing growth, in dollar terms, of 34% - 40% over revenues of FY 2006.

Net profit for FY 2007 is expected to be in the range of $ 11.25 million (Rs. 50.1 crore) and $ 12 million (Rs. 53.4 crore), representing growth, in dollar terms, of 51% to 61% over net profits of FY 2006. The company believes the main drivers for growth in net profit would be improvement in offshore mix, new businesses at higher pricing, rationalisation of costs by employing more freshers and maintaining selling, and general and administration expenses at the current level in absolute terms.

For Q1 June 2006, the company reported 1% growth in consolidated net profit, to Rs 10.34 crore, on 13% growth in sales, to Rs 102.27 crore. During the first quarter, the offshore/onsite mix of the company improved to 47:53 as against 43:57 in the quarter ended March 2006. The target of the company is to have an offshore/onsite ratio of 52:48 by end FY 2007.

KPIT Cummins recently launched an operation in Poland to serve its existing global clients.

Souce: CM