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Result Update

October 27, 2015
Rating matrix
Rating
Target
Target Period
Potential Upside

:
:
:
:

KPIT Technologies (KPISYS)

Hold
| 135
12 months
-1%

Optimistic recovery…

What’s changed?
Target
EPS FY16E
EPS FY17E
Rating

Changed from | 105 to | 135
Changed from |10.9 to | 12.5
Changed from |13 to | 14
Unchanged

Quarterly performance
Revenue
EBITDA
EBITDA (%)
PAT

Q2FY16
812
114
14.0
75

Q2FY15
757
101
13.3
71

YoY (%)
7.2
12.7
68 bps
6.4

Q1FY16 QoQ (%)
758
7.1
73
56.3
9.6 442 bps
44
69.1

Key financials
| Crore
Net Sales
EBITDA
Net Profit
EPS (|)

FY14
2,694
423
249
13.0

FY15E
2,990
327
237
11.9

FY16E
3,262
392
250
12.5

FY17E
3,588
430
280
14.0

FY15E
11.5
11.4
8.3
2.0
17.0
14.7

FY16E
11.0
10.8
6.6
1.7
15.4
17.4

FY17E
9.8
9.6
5.6
1.5
14.9
17.4

Valuation summary
P/E
Target P/E
EV / EBITDA
P/BV
RoNW (%)
RoCE (%)

FY14
10.6
10.4
6.6
2.1
19.5
20.8

Stock data
Particular
Market Capitalization (| Crore)
Total Debt (Sept-15) (| Crore)
Cash and Investments (Sept-15) (| Crore)
EV (| Crore)
52 week H/L
Equity capital
Face value

Amount
2,617.6
447.8
440.2
2,625.2
232 / 85
38.2
2.0

Price performance
TechMahindra
MindTree
KPIT Tech
NIIT Tech

| 137

1M

3M

6M

12M

(6.1)
(6.6)
7.2
22.8

(16.7)
3.2
(30.7)
33.3

(26.8)
(10.0)
(50.5)
31.9

(0.7)
46.0
(41.6)
20.8

Research Analysts
Abhishek Shindadkar
abhishek.shindadkar@icicisecurities.com

ICICI Securities Ltd | Retail Equity Research

• KPIT reported a strong set of quarterly earnings in Q2FY16
• US$ revenues grew 5.3% QoQ to $124.6 million significantly above
our 1% QoQ growth and $119.5 million estimate
• EBITDA margins improved 441 bps QoQ to 14%, above our 60 bps
decline and 9% estimate led by growth, improvement in people
metrics, rupee, partially offset by the wage hike impact (200-225 bps)
• Reported PAT of | 75.1 crore was above our | 45 crore estimate led
by revenue, margin beat
Optimistic recovery…
KPIT reported a strong set of Q2FY16 earnings, which were better
operationally as well. Dollar revenues grew 5.3% QoQ led by 1) recovery
in top 10 customers (3.5% QoQ growth), 2) growth in products and
platforms (P&P) (21.5%), SAP (9.9%) and product engineering services
(PES, 9.2%) SBUs and 3) automotive (5.8%) and energy & utilities (19.8%)
businesses. As highlighted in the previous quarter, KPIT expects marginal
growth in both topline and bottomline in FY16E relative to FY15. The
management has highlighted four key factors that could improve revenue
and margin trajectory, going ahead, 1) profitability – pyramid correction
as KPIT targets 70% gross recruits to be freshers, improve utilisation and
productivity, tail accounts rationalisation, 2) people development –
focused training to align employees’ skill sets with their respective SBUs
and devise a clear career progression plan, 3) growth – increasing
investments in newer technologies (digital, IMS, Internet of Things) and
hiring subject matter experts, sales and account management personnel,
and 4) predictability.
Adjusting estimates to account for margin beat…
Though we maintain our revenue growth estimate, we are adjusting
margin assumption, led by H1 beat leading to revision in EPS estimate.
We now expect FY16E margins to expand 110 bps YoY to 12% (10 bps,
11% earlier). We also raise our FY17E margin assumption to 12% vs.
11.5% earlier as the management reiterated that the margin improvement
trajectory could continue led by operational efficiency (freshers replacing
middle level employees), utilisation improvements (onsite utilisation was
up 413 bps to 91.2% while offshore was up 334 bps to 69.6%), rupee and
rationalisation of tail accounts.
Top account recovery aids performance…
Large client revenue growth recovered in Q2. Top customer revenues
revenue grew 5.4% QoQ (down 8.2%, 0.8%, 1.1% QoQ in Q1FY16, Q4,
Q3FY15, respectively) but declined 5.1% YoY. Top 6-10 grew 8% QoQ vs.
3.5% decline while top 2-5 customer revenues declined 1.2% QoQ vs.
5.9% growth in Q1. Note that top customer revenues declined 0.6% YoY
in FY15, top 2-5 clients saw a considerable decline of 15% YoY while top
6-10 grew a healthy 31% YoY.
Raising estimates and target price…
We estimate KPIT will report rupee revenue, earnings CAGR of 10%, 8.7%
(5% earlier) in FY15-17E (average 12% EBITDA margins in FY16-17E,
11.3% earlier), vs. 33%, 23% reported during FY10-15 (average 15.7%),
respectively, driven by weakness in select business units and uneven
margin profile in SAP SBU. We now value the stock at 9.5x (8x) FY17E
EPS estimate of | 14 (| 13) and raise our target price to | 135 (| 105).
Higher multiple is to account for recovery in growth, margin trajectory.

280 13.0 18.0 217 10.680 70.8 63.4 69.2 12.4 7.7 97.0 60.3 545. SAP.0 430 4.9 56.5 -31.6 FY15 10.5 72.7 76.7 70.0 12.4 451 bps 5.1 146.7 240 bps 124.2 NM 44.2 3.0 392 9.com Research ICICI Securities Ltd | Retail Equity Research Page 2 .1 69.1 Current FY16E FY17E 12.8 9.933 7.1 185 bps 0.7 61.2 Source: Company.5 45.0 50 bps 280 8.com Research Assumptions Closing employees Overall utilisation (%) Average $/| FY14 9.3 9.7 62.2 12.8 9.5 212.023.6 26.0 3.1 Key Metrics Closing employees 10.6 10.6 758.9 EBITDA EBITDA Margin (%) Depreciation & amortisation EBIT EBIT Margin (%) Other income (less interest) PBT Tax paid PAT 113.3 68 bps 24.262 0.2 Old 3.9 31.7 Comments Revenue growth led by growth in top accounts products and platforms.3 1.6 7.5 -150 bps 60.9 9.5 28. margin beat Headcount declined 180 QoQ over 141 decline reported in Q1 Utilisation jump led by pyramid correction Change in estimates (| Crore) Revenue EBITDA EBITDA Margin (%) PAT EPS (|) Old 3.3 551.6 6.5 63.3 75.7 13.6 225.980 73.9 10.1 52.5 Earlier FY16E FY17E 12.280 13.680 70.9 14.6 757.5 Management targets 70% of gross recruits to be freshers in FY16E Source: Company.0 16.6 76.5 143.4 776.4 72.262 359 11.6 63. product engineering services SBUs Gross margin improvement led by employee rationalisation efforts Gross margin improvement leads to EBITDA margin expansion PAT was above our estimates led by revenue.5 259 13.9 72.4 2.0 6.0 64. ICICIdirect.4 353 bps 64.659 Overall utilisation (%) 74.0 FY17E New % Change 3.588 413 11.296 76.6 100.0 101.2 12.5 63.9 22.Variance analysis Q2FY16 Q2FY16E Q2FY15 YoY (%) Q1FY16 QoQ (%) Revenue Employee expenses 812.6 17.839 -1.0 Average $/| 65.1 403 bps 140.1 56.4 27.1 4.4 532. ICICIdirect.1 -29.0 Comments Revenue growth could likely be muted in FY16E led by soft H1 Margin expansion to be driven by operational efficiency and pyramid correction Source: Company.900 71.1 12.0 100 bps 250 15.0 7.4 7.1 Gross Margin Gross margin (%) SG&A expenses 260.1 1.1 15. ICICIdirect.4 61.588 0.5 15.9 29.0 14.8 63.8 32.5 17.0 17.1 1.6 441 bps 16.3 NM 70.9 FY16E New % Change 3.com Research 10.6 75.0 562.8 6.9 213.7 25.0 8.9 72.

Q2 (~4. From a geography perspective. We also raise our FY17E margin assumption to 12% vs. partially offset by the wage hike impact of 200-225 bps.5%.6%). ICICIdirect. 9. followed by the US with 1. respectively. Sequentially. utilisation improvements (onsite utilisation was up 413 bps to 91. P&P grew 21. people pyramid.1% QoQ (vs.com Research Adjusting estimates to account for margin beat… Though we maintain our revenue growth estimate. followed by SAP and PES with 9. We now model FY16E margins could expand 110 bps YoY to 12% (10 bps.5%. IoT and IMS have started yielding results as it sees traction across these offerings both in terms of deal wins as well as pipeline.5% vs. respectively. 11. 7.9 10. 2.2%. a sharp reversal from the healthy recovery in the Q3 (8%).5-5%) and Q1 (break-even). Margins rise led by operational levers… EBITDA margins improved 441 bps QoQ to 14% vs.5 5 FY17E FY16E Q2 Q1 FY15 Q4 Q3 Q2 Q1 FY14 FY13 FY12 FY11 FY10 0 EBITDA margin Source: Company.2% growth. Recall.0 13.1 14. rupee and rationalisation of tail accounts. led by H1 beat.6 12. we are adjusting margin assumption. there was broad based growth with Europe and APAC growing 14.1 20 14.8% leading to blended growth of ~4% – likely helped by price realisations. The management commentary suggests that investments in developing capabilities in engineering. SAP business margins continue to be volatile but could stabilise as maintenance revenue contribution rises.5% in Q1 and were above our 9% estimate.0 4.9 14. improvement in people metrics (utilisation.5% earlier as the management reiterated that the margin improvement trajectory could continue led by operational efficiency (freshers replacing middle level employees).5% in Q4FY15 25 22.5 16. span of control at the middle level) and rupee.4% growth in Q1. Exhibit 1: Margins improve ~950 bps from lows of 4.3 15.Company Analysis Operating highlights Quarterly growth was led by volumes – onsite grew ~5% while offshore grew 3. led by growth.0 12. 11% earlier).7% and 14. SAP business margins turned negative in Q4.9 % 15 10 9.3 13. digital.2% while offshore was up 334 bps to 69. leading to a revision in EPS estimate.5% decline in Q1) while enterprise solutions (ES) declined 0. Integrated Enterprise Solutions (IES) declined 0. ICICI Securities Ltd | Retail Equity Research Page 3 .4% and 9.7 12.

ICICI Securities Ltd | Retail Equity Research Page 4 . Note.3 10.2% QoQ vs.0 32.0 7.0 0 118 125 -10 100 Dollar revenue FY17E FY16E Q2 Q1 FY15 Q4 Q3 Q2 Q1 FY14 FY13 FY12 FY11 FY10 -20 Growth. 5.1 5. Q4.7 -20 FY09 FY10 FY11 Growth.0 40 30 % 20 19.7 10.5% decline while top 2-5 customer revenues declined 1.7 154 8.0 0 -10 -11. respectively) but declined 5. Top 6-10 grew 8% QoQ vs.3 13.6% YoY in FY15.7 115 125 126 122 -0.5% CAGR in FY15-17E 45.5 10 32.0 10.3 20 % 600 10 5.1 FY14 FY15 13 5.0 8.2%. top 2-5 clients saw a considerable decline of 15% YoY while top 6-10 grew a healthy 31% YoY. ICICIdirect. 1. Note.9 16.7 38.9 2.5 5.2 13.7444 410 $ million 500 400 11.7 16. Q3FY15.3 50 40 30 15.8%. ICICIdirect.4% QoQ (down 8. decline of three in Q1. Nasscom guidance – KPIT may likely underperform industry average growth in FY16E 45.9% growth in Q1.4 309 300 200 565 -11.com Research Top account recovery aids performance… Large client revenue growth recovered in Q2.1% YoY. KPIT had added 10 customers to >$1 million category in FY15 and 55 since FY10 largely due to acquisitions. Top customer revenue grew 5.0 18. top customer declined 0.7 224 514 489 10. Client metric was steady in Q2 as clients contributing >$1 million increased by one vs. 0.7 50 38.com Research Exhibit 3: KPIT growth vs. YoY Source: Company. YoY FY12 FY13 FY16E NASSCOM guidance Source: Company. 3.Exhibit 2: Dollar revenue may grow at 7.1% QoQ in Q1FY16.

ICICIdirect.4 70.com Research Utilisation improvement continues… Onsite and offshore utilisation improved 413 bps (130 bps in Q1) and 334 bps (81 bps) during the quarter to 91.6 74.1%) and 69.1 % 71.6 74 76.4 69.Exhibit 4: Company adds 56 clients to $1 million+ category since FY10 100 80 84 87 90 80 83 90 87 88 78 FY13 FY14 Q1 Q2 Q3 Q4 FY15 Q1 Q2 59 60 40 32 40 20 0 FY10 FY11 FY12 $1 million+ clients Source: Company. Note.5 72. respectively.5 74.6 71 74.8% (66.2 74.4%). ICICIdirect.4 75.0 75. which were margin levers in the quarter.2% (87. Exhibit 5: Utilisation improvement led by pyramid correction.com Research ICICI Securities Ltd | Retail Equity Research Page 5 FY17E FY16E Q2 Q1 FY15 Q4 Q3 Q2 Q1 FY14 FY13 FY12 FY11 FY10 65 .0 73.9 68 Overall utilisation Source: Company. Q4 utilisation was impacted by volume de-growth and higher net additions and led to management initiating multiple actions to improve utilisation and productivity. could be margin lever in FY16E 80 77 77.8 70.

respectively.com Research Exhibit 7: Valuations FY14 FY15E FY16E FY17E Sales (| cr) 2.0 EPS (|) 13.0 Growth (%) 22. 33%.8 EV/EBITDA (x) 6.3) 5.6 8.1 10. The management has highlighted four key factors that could improve revenue and margin trajectory.0 11.7% (5% earlier) in FY15-17E (average 12% EBITDA margins in FY16-17E.3 12.5 11.5x (8x) FY17E EPS estimate of | 14 (| 13) and raise our target price to | 135 (| 105). SAP. execution has to be flawless and consistent to regain investor confidence.3 11. growth and predictability.9 Oct-15 Apr-15 Oct-14 Apr-14 Oct-13 Apr-13 Oct-12 Apr-12 Oct-11 Apr-11 Oct-10 Apr-10 Oct-09 Apr-09 Oct-08 Apr-08 Oct-07 Apr-07 0 Source: Company.Outlook and valuation KPIT reported a strong set of quarterly earnings in Q2FY16 led by growth in products and platforms.6 5.5 14.0 15. However. 23% reported during FY10-15 (average 15. ICICIdirect.9 12. profitability.694 2.6 11.3% earlier). driven by weakness in select business units and uneven margin profile in SAP SBU.4 14. going ahead. 8.8 (8.7 17. Higher multiple is to account for recovery in growth. Exhibit 6: One year forward rolling PE chart 250 200 | 150 100 50 Price 14 11 8 5 2 PE (x) 10.0 Source: Company.6 RoNW (%) 19. earnings CAGR of 10%.4 . energy & utilities business. margin trajectory.588 Growth (%) 20. We estimate KPIT will report rupee revenue. ICICIdirect.com Research ICICI Securities Ltd | Retail Equity Research Page 6 RoCE (%) 20.262 3.990 3.0 9.8 14.4 17. vs.7%).5 17.0 9. people development. We now value the stock at 9.3 6. product engineering services SBUs and automotive. 11.

L. Source: Reuters ICICIdirect com Research ICICI Securities Ltd | Retail Equity Research Value 9. Oct-15 Source: Company. to expand in the Human Capital Management (HCM) Sep-13 Unveils its new brand and visual identity with a new logo and name.7 -1.94 3.1 30-Jun-15 1.16 30.98 41.68 22.5 30-Jun-15 1. Inc.3% QoQ decline led by weakness in SAP business and likely to miss its FY14E guidance of 14-16% Guides for 12-14% dollar revenue growth with at least 17% margins for FY15E though achieving it becomes challenging post a weaker Q1 Sep-14 Apr-15 Acquires Bharat Forge's 50% stake in Impact Automotive JV for | 10.50m -1.28 16.80 27.56 9.13m 0. world's largest JD Edwards solution provider Apr-12 In Q4FY12.0 -0.29m -2. L.18 7.82m 0. Ruane.2 1.57m -1. ICICIdirect.43 41. Capital Research Global Investors Proficient Finstock.87 3.4 6.0 -0. Growth and margins may remain muted in FY16E Jul-14 Reports mixed set of Q1FY16 earnings as $ revenues declined 3.28m 2.68 35.95 Source: Reuters. Ltd.95 35. Proficient Finstock.67 21.83 3. Ltd.1 30-Jun-15 8.57 5.P.17 29.10 8. Cunniff & Goldfarb.30m Sells Investor name CX Securities.77m -2.22 21.27 24.32m 0.0 30-Apr-15 2.1 0. KPIT Technologies Ltd.3% QoQ while margins improve 510 bps QoQ to 9.1 30-Jun-15 2. dollar revenues grow 2% QoQ against a difficult macro environment and guides for 14-16% dollar growth during FY14E Jun-13 Acquires the consulting and services business of Baltimore. ICICIdirect. Fidelity Management & Research Company KPIT Systems Employees Welfare Trust CX Advisors LLP Grandeur Peak Global Advisors. Inc. Cunniff & Goldfarb.20m -1.8 -1.81 33.5%. MD-based Learn2Perform (L2P).2% QoQ while EBITDA margins decline 940 bps to 4.64 23.93 11.12m Page 7 .71m -3. Norges Bank Investment Management (NBIM) Latest Filing Date % O/S Position (m) Change (m) 30-Jun-15 13.3% QoQ while EBITDA margins improved 441 bps to 14%.6 30-Jun-15 4. Guides for 35% dollar revenue growth for FY13E Jan-13 Reports flat QoQ dollar revenue growth during Q3FY13 and maintains its annual guidance for FY13 Apr-13 During Q4FY13.00 4.73 5.73m Shares -5. Morgan Stanley Investment Management Inc.59m -1.89m 1. Inc.61 31.P. Ltd.L. Kulkarni (Anil Gajanan) The Vanguard Group.6 -0.31 45.0 5-Aug-15 12.8 crores. Ltd. reports eighth consecutive quarter of best-in-the-industry growth rate (30% QoQ).66m 1.7 0.5% Reports strong Q2FY16 earnings as revenues grow 5.Company snapshot Target price : | 135 250 200 150 100 50 Oct-16 Jul-16 Apr-16 Jan-16 Oct-15 Jul-15 Apr-15 Jan-15 Oct-14 Jul-14 Apr-14 Jan-14 Oct-13 Jul-13 Apr-13 Jan-13 Oct-12 Jul-12 Apr-12 Jan-12 Oct-11 Jul-11 Apr-11 Jan-11 Oct-10 Jul-10 Apr-10 Jan-10 0 Source: Bloomberg.com Research Top 10 Shareholders Rank 1 2 3 4 5 6 7 8 9 10 Shareholding Pattern Name Nuvo ChrysCapital Advisors Pvt.02 8. Patil (Kishore P) Value -17.6 (in %) Promoter FII DII Others Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 22.19m 3. Reliance Capital Asset Management Ltd. as part of rebranding initiative Jan-14 Jul-14 Reports a 2.2 5-Aug-15 1. ICICIdirect.49m Shares 6.46m -2.com Research Key events Date Oct-10 May-11 Event Announces it has completed the merger of German vehicle diagnostics and telematics specialist In2Soft Gmbh Enters into a definitive agreement to take 50% stake in SYSTIME.78 21. Company. L. LLC Patil (Kishore P) DSP BlackRock Investment Managers Pvt.3 0. The JV was formed to manufacture hybrid solutions for automotives Reports disappointing Q4FY15 earnings as revenues decline 3.38 8. (US) DSP BlackRock Investment Managers Pvt.com Research Recent Activity Buys Investor name Ruane.3 30-Jun-15 4.74m 0.

0 280.8 452.0 78.3 70.0 1.0 2.0 378.3 30.com Research Balance sheet Equity | Crore Key ratios Per share data (|) Reserves & Surplus 1.0 Interest 28.5 14.0 FY14 FY15E FY16E FY17E 39 39 39 39 FY15E FY16E FY17E 343 248 338 378 54 85 70 79 (160) (125) (102) (116) 32 83 (20) 64 CF from operations 103 226 208 257 Other Investments (116) 150 38 45 (68) (100) (85) (90) CF from investing Activities (191) 50 (47) (45) Inc / (Dec) in Equity Capital 8 - - - (50) (50) (Purchase)/Sale of Fixed Assets Other adjustments Closing cash - FY14 6 - - - - 191 420 487 604 FY14 FY15E FY16E FY17E Source: Company.2 Provisions Application of funds Source: Company.0 1.Financial summary Profit and loss statement | Crore Cash flow statement | Crore FY14 FY15E FY16E FY17E 2.0 - - 280.818.com Research Source: Company.1 38.275 1.2 7.0 Networth 1.7 10.0 237.9 98.0 0.6) 36.2 93.5 14.3 6.0 EPS (Growth %) 22.9 0.1 70. ICICIdirect.878 BV 66.8 Acc.694 2. ICICI Securities Ltd | Retail Equity Research Page 8 .2 0.8 9.com Research Source: Company.8 0.4) 35.6 Loans and advances 74 90 98 108 Market Cap / Sales 1.6 5.3 12.4 17.0 - 250.624 1.7 Depreciation 54.6 22.2 58 69 75 83 Debt / EBITDA 1.0 250.8 Other current assets 73 81 88 97 Price to Book Value 2. from associates 249. ICICIdirect.0 Inc / (Dec) in sec.1 1.0 9.2 Other liabilities 23 42 46 50 Cash Per Share 9.8 14.3 0.8 3.5 338.5 17.0 85.358 1.1 3 23 23 23 Debtors 674 702 746 847 10.8 515.0 CF from Financial Activities 79 (47) (94) (95) Net change in cash (9) 229 67 117 Total Revenues Growth (%) COGS SG&A expenses EBITDA PBT before Exceptional Items PAT before Exceptional Items Exeptional items PAT before MI Minority Int & Pft.7 7.9 (27.299.9 Minority Interest - - - - DPS 1.8 613.280 3.0 24.5 Trade payables 102 127 123 152 Solvency Ratios Current liabilities 226 254 228 251 Debt / Equity 0.1 41.0 1.2 Loans 439 445 395 345 3.8) 5.6 28.262 3.6 8.0 1.1 2.1 10.0 248.237 1.151 Current Ratio 2.8 Dividend & Divendend tax (20) (24) (22) (27) Tax 94.0 9.5 570.0 EPS 13.0 15.8 (22.839 EPS 13.4 Goodwill 599 508 508 508 RoIC 55.9 12.3 2.0 11.1 1.013 3.0 Gross Block 530 630 715 805 PAT Margin 9.5 11.3 41.com Research .4 14.1 2.544.280 3.9 12.9 21.8 (8.0 18.0 Profit before Tax Depreciation (inc)/dec in Current Assets (inc)/dec in current Liabilities PAT 249 237 250 280 Growth (%) 25.013 3.0 45.0 0.dep 317 402 472 551 Debtor days 91 86 83 86 Net Block 214 229 244 255 Creditor days 14 16 14 15 Source of funds CWIP Operating Ratios (%) EBITDA Margin 2 2 2 2 Investments (long term) 12 12 12 12 RoE 19.7 17.3 0.1 2.586 1.4 1.588 20.0 Interest Paid on Loans (18) (29) (22) (18) 249.147.3 11.6 423 327 392 430 Growth (%) 15.397 1.8 Cash & Cash equivalents Inventories Return Ratios (%) Valuation Ratios (x) P/E 191 420 487 604 EV / EBITDA 6.6 35.9 12.0 2.0 12.0 - - - 237.7 1.5 12. ICICIdirect.loan Funds 105 Growth (%) 19.689 4.9 Investments (short term) 174 59 59 59 RoCE 20.0 81.0 11.7) 19.9 Other Income (7.3) 5.2 2.0 343.5 87.9 7.151 15.1 (4. ICICIdirect.6 11.689 4.1 11.990 3.0 11.

2 42.4 20.ICICIdirect.181 31.1 EV/EBITDA (x) FY15 FY16E FY17E 13.0 9.9 73. Source: Company.7 21.4 RoE (%) FY15 FY16E FY17E 19.5 16.8 77.7 12.4 55.4 29.4 8.500 Sell 5.7 23.4 17.6 11.1 18.4 29.721 26.4 16.2 13.7 24.1 31.450 Buy 12.9 9.2 18.3 26.1 14.0 Eclerx (ECLSER) 32 45 Buy 2.537 2.4 81.5 Wipro (WIPRO) * June year end.5 33.9 16.1 Firstsource (FIRSOU) 859 1.9 12.7 27.8 43.4 45.0 KPIT Tech (KPISYS) 1.0 40.1 37.4 21.9 7.com Research ICICI Securities Ltd | Retail Equity Research P/E (x) FY15 FY16E FY17E 17.9 21.2 11.9 7.5 23.2 12.505 53.6 13.0 130.4 34.1 18.9 57.9 26.com coverage universe (IT) CMP M Cap EPS (|) (|) TP(|) Rating (| Cr) FY15 FY16E FY17E Sector / Company 550 500 Hold 6.1 18.7 22.0 14.2 21.9 21.2 13.4 12.6 32.2 33.9 20.3 25.4 18.2 22.529 1.7 23.2 31.9 26.0 HCL Tech* (HCLTEC) 1.3 5.577 35.502 31.4 11.4 11.0 Infosys (INFTEC) 136 135 Hold 2.7 25.6 15.3 16.4 14.6 5.7 8.8 6.6 25.700 74.3 4.2 15.0 13.5 11.7 7.0 110.7 17.9 24.0 Cyient (INFENT) 1.7 19.5 15.7 29.6 20.2 5.1 11.7 32.0 40.1 35.9 29.3 11.8 31.1 RoCE (%) FY15 FY16E FY17E 22.0 15.3 6.1 35.3 45.392 36.5 9.4 14.2 19.4 21.4 14.8 11.9 17.2 20.5 14.0 93.147 1.8 36.1 17.0 TCS (TCS) 537 600 Buy 51.8 42.5 10.1 8.9 16.5 21.5 28.3 17.5 19.0 64.5 14.6 14.9 4.050 Buy 120.9 22.9 11. ICICIdirect.2 12.5 11.0 Tech Mahindra (TECMAH) 569 680 Buy 140.5 9.3 19.168 3.7 15.818 63.870 1.0 22.7 30.0 Mindtree (MINCON) 573 525 Hold 3.3 20.2 18.0 9.5 20.2 15.0 8.8 11.6 13.1 Page 9 .7 9.9 13.300 Buy 263.5 31.6 10.0 65.0 13.0 Persistent (PSYS) 2.8 4.957 110.2 5.0 51.8 119.4 40.7 17.4 9.6 9.3 99.681 11.6 16.9 27.3 21.7 30.0 36.800 Buy 499.4 33.3 74.6 22.5 11.6 26.5 NIIT Technologies (NIITEC) 674 715 Hold 5.0 47.838 51.

Strong Buy: >15%/20% for large caps/midcaps. respectively. current market price and then categorises them as Strong Buy. The performance horizon is two years unless specified and the notional target price is defined as the analysts' valuation for a stock. MIDC.RATING RATIONALE ICICIdirect.com endeavours to provide objective opinions and recommendations. ICICIdirect. Andheri (East) Mumbai – 400 093 research@icicidirect.com ICICI Securities Ltd | Retail Equity Research Page 10 . ICICI Securities Limited. Hold and Sell.com assigns ratings to its stocks according to their notional target price vs. with high conviction. Buy: >10%/15% for large caps/midcaps. respectively. Buy. Road No 7.com ICICIdirect. 1st Floor. Pankaj Pandey Head – Research pankaj. Sell: -10% or more. Hold: Up to +/-10%. Akruti Trade Centre.pandey@icicisecurities.com Research Desk.

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