KPIT's revenue will grow by 16-18% in FY20: Vinit Teredesai

Vinit Teredesai, Chief Financial Officer (CFO), KPIT Technologies, talks about provides a business outlook of the company during a candid chat with Swati Khandelwal, Zee Business. Edited Excerpts:

Do you think the business is reviewing now after going through a downturn, if yes, then what signals are you getting from the clients end?
We provide technological services to the global auto manufacturers and we work for the vehicles that will be launched in the next 2-3 years. But, the downturn about which you are talking is linked with the day-to-day vehicles sales. Our revenue model is not dependant on daily vehicle sales but it depends on the companies that are spending on the R&D and we haven't seen a decline in the segment in the last two years. Technology is being upgraded/developed on a regular basis and companies are spending on it. Actually, they, the auto manufacturers, are making themselves ready for the upturn which may happen in next two-three years, when they can roll out with new models based on these technologies as everyone wants to be at the leadership position. That's why we haven't any downturn in the R&D spent to date.

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What is your margin outlook for the segment? Do you have any opportunity for acquisition in this space?
The revenue outlook was provided at the start of the year and we said that revenue will grow in the range of around 16-18%. Interestingly, our services business has achieved the target in the first two quarters of the year and we can't see any negatives for the upcoming two quarters. So, we are confident about achieving the revenue target. When it comes to profitability, then we had given our EBITDA outlook of around 14-15%, which was achieved in the first quarter and our increment has remained 1% more in this quarter than what we give in the industry. Rupee depreciation has benefited us a bit but the benefits of the increment will be seen in a long-term. Secondly, our attrition rate has come down. Having an eye on all these benefits, it seems that we will be able to meet the EBITDA margins of 14-15%. Next year's outlook will be provided only our annual results are declared.

As far as the acquisition is concerned then just last year we came out of a major restructuring. We always look after opportunities but at this moment we have an outlook that acquisitions of specializing and niche category will be taken into consideration. However, we will not go for some big and large acquisitions but small acquisitions that provide either of the following customers, technology and skill or all three of them will be taken into consideration.