KPIT Technologies expects 15 pc dip in Jun quarter revenues, stability in second half of FY21

Automobile industry-focused software exporter KPIT Technologies expects a 15 per cent shrinkage in revenues in the June quarter and a difficult first half of the current financial year, a top official has said. The business should stabilise in the second half of 2020-21 as the world comes out of the COVID-19 pandemic, its co-founder, Managing Director and Chief Executive Kishor Patil told PTI.

He said the automobile industry has been among the worst hit by the pandemic and some players have been left without any revenues for the first quarter. "We were looking for a high growth in 2020-21 after delivering a 14.5 per cent revenue growth in constant currency terms to USD 303 million in 2019-20. There will be impact to our business, but our long-term strategies are correct," Patil said.

He added that there will be a decline of 15 per cent in both the volumes as well as revenues in the first quarter. When asked if the long-term developmental contracts have witnessed some furloughs, Patil said that the same is the case but exuded confidence that they will come back as product development work cannot stop.

The bet to concentrate on the top-25 clients has paid back with a revenue growth of 20 per cent from this segment, and this grouping now accounts for over 80 per cent of the revenue base. From a geographical segment perspective, the US is more impacted but will also be the first to come back, he said adding that Germany and Japan are showing resilience.

Auto manufacturers in the passenger cars segment will likely continue making spends on technological aspects, while the commercial vehicle companies will be a bit slower, he said. Currently, over 98 per cent of its staff is working from home and the company has created simulations where it is necessary to ensure that productivity does not suffer, he said adding that soon, it will be 100 per cent.

There will be an impact to profit margins as well but the company has decided to hold on to all the employees without any retrenchments, Patil said. Some of the emoluments have been moved to the variable side and the same shall be made to employees as per the financial performance at the end of the year, he said adding that yearly hikes, which happen in July, have also been deferred.

It is also asking freshers to join a bit late in what can be delays of up to six months, Patil said. He added that in the medium term as well, more associates will continue working from home. Patil said the business is generating cash faster and the balance sheet has been strengthened with the overall cash now standing at Rs 325 crore as against the Rs 70 crore in the year-ago period.

The company scrip was trading 4.90 per cent up at Rs 49.20 apiece on the BSE at 1330 hrs..

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