KPIT Cummins

Template
(All numbers in INR Millions, except per share data)
(Red for Assumptions, Blue for Actuals and Black for Calculations)
Date Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14
Year 2008 - A 2009 - A 2010 - A 2011 - A 2012 - A 2013 - E 2014 - E
Mar-15 Mar-16 Mar-17
2015 - E 2016 - E 2017 - E
KPIT Cummins
Click on the name of Tab to go to the relevant sheet
No Name Of Tab

1 Company Overview

2 Income Statement

3 Balance Sheet

4 Cash Flow Statement

5 Revenue Metrics

6 Cost Metrics

7 Shedules

8 Debt Shedules

9 Valuation

10 Relative Valuation
o to the relevant sheet
Description

Overview of the Company

Historical and forecasted income statement

Historical and forecasted balance sheet

Historical and forecasted cash flow statement

Historical and forcasted Revenue

Cost Structure

Shedules

Debt Structure

DCF Valuation

Peer Valuation
KPIT Cummins
Company Overview
(All numbers in INR Millions, except per share data)
(Red for Assumptions, Blue for Actuals and Black for Calculations)

Company Information
Company Name KPIT Cummins Infosystems Ltd Investor Relations
Industry IT Services/Consulting Site :
Sector Information Technology
Current Market Price INR 123.00
Ticker KPITCUMM Management Team
Market Capitalization (MM) 20,500 Chairman:
Relative Index NSE CEO:
Year end 31-Mar
Reporting currency INR

Per Share Data & Key Ratios

2008 - A 2009 - A 2010 - A 2011 - A 2012 - A 2013 - E

EPS diluted (reported) 6.55 8.41 10.80 11.35 8.08 11.96

EBIT/sales (%) 8% 18% 18% 11% 12% 12%
Net income/sales (%) 9% 8% 12% 9% 9% 10%
ROE 19% 40% 22% 16% 19% 21%
EV/Sales 1.0 x
EV/EBITDA 6.9 x
P/E 10.3 x

Revenue Forecast

45,000
40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000
-
2012 - A 2013 - E 2014 - E 2015 - E 2016 - E
 2011 - A 2012 - A 2013 - E 2014 - E 2015 - E 2016 - E
Revenue 10,230 15,000 19,683 23,923 29,074 35,229
Y/Y Growth % 47% 31% 22% 22% 21%
 Reccomendation
www.kpitcummins.com Target Price 134.20
Current Market Price 123.00
Upside/Downside (%) 9%
Rating Sell
S. Pandit
Kishor Patil M Cap @ Target Price 22,366.97

2014 - E 2015 - E 2016 - E 2017 - E Company Description

14.75 18.14 22.20 26.99 KPIT Cummins Infosystems Limited provides technology solutions to
across domains such as advanced technology solutions, diversified fi
12% 12% 12% 12% services, manufacturing, and business information technology.It ope
10% 10% 11% 11% segments: integrated enterprise solutions (IES), auto and engineerin
21% 20% 20% 19% standard assessment procedure and semiconductor solutions group.
0.8 x 0.7 x 0.6 x 0.5 x
5.7 x 4.7 x 3.9 x 3.2 x
8.3 x 6.8 x 5.5 x 4.6 x

Enterprise Value Added

140
50%
120 69.55807489 131.105126549
45%
40% 100
35% 80
30%
60
25% 24.35 24.35

20% 40
37.20 37.20 37.20
15% 20
10% 0
5%
0%
2016 - E 2017 - E
2017 - E Explicit Forecast Perio 37.20
42,487 First Stage of Valuation 37.20 24.35
21% Terminal Year 37.20 24.35 69.56
Total Value 131.11
 ovides technology solutions to global clients
hnology solutions, diversified financial
s information technology.It operates in four
tions (IES), auto and engineering (A&E),
semiconductor solutions group.

69.55807489 131.105126549

24.35

37.20
KPIT Cummins
Income Statement
(All numbers in INR Millions, except per share data)
(Red for Assumptions, Blue for Actuals and Black for Calculations)
Date Mar-08 Mar-09 Mar-10 Mar-11
Year 2008 - A 2009 - A 2010 - A 2011 - A

Overseas Sales 5,523 7,410 6,716 9,468

Domestic Sales 312 521 600 762
Total Sales 5,835 7,932 7,316 10,230

Software Development Expenses (C 3,730 4,467 4,090 6,599

Gross Profit 2,104 3,464 3,226 3,631

Selling and Marketing Expenses 577 688 664 762

General and Administration Expens 794 943 948 1,346
EBITDA 733 1,834 1,614 1,522

Depreciation and Amortisation 255 436 308 411

EBIT 478 1,397 1,306 1,111

Interest Expense 75 45 27 13
Interest Income - - -
Other Income 199 (574) (253) 5
Exceptional Items - - - -
EBT 602 778 1,026 1,103

Provision for Taxation 76 120 169 155

PAT 526 658 857 948

Exceptional Item - Provision for decl 14 - - -

Minority Interest 1 0 - (2)
Net Income 513 659 857 946

Share in Profit from Associate - - - -

Net Income 513 659 857 946

EPS
Basic 6.67 8.44 10.97 11.76
Diluted 6.55 8.41 10.80 11.35

Number of Shares
Basic 77 78 78 80
Diluted 78 78 79 83
Dividend - 47 55 62
Dividend Tax - 8 9 10
Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17
2012 - A 2013 - E 2014 - E 2015 - E 2016 - E 2017 - E

15,000 19,683 23,923 29,074 35,229 42,487

9,934 12,867 15,638 19,006 23,029 27,774

5,066 6,816 8,285 10,069 12,200 14,714

1,115 1,465 1,781 2,164 2,622 3,162

1,770 2,456 2,985 3,628 4,396 5,302
2,181 2,895 3,519 4,277 5,182 6,249

445 572 696 848 1,031 1,253

1,736 2,323 2,822 3,429 4,150 4,997

78 - - - - -

128 126 198 286 395 529

100
1,886 2,450 3,020 3,715 4,546 5,526

437 456 562 691 845 1,028

1,450 1,994 2,459 3,024 3,700 4,498

-
(31)
1,418 1,994 2,459 3,024 3,700 4,498

35
1,454 1,994 2,459 3,024 3,700 4,498

8.19 12.39 15.28 18.79 23.00 27.95

8.08 11.96 14.75 18.14 22.20 26.99

161 161 161 161 161 161

167 167 167 167 167 167
KPIT Cummins
Balance Sheet
(All numbers in INR Millions, except per share data)
(Red for Assumptions, Blue for Actuals and Black for Calculations)
Date Mar-08 Mar-09 Mar-10 Mar-11
Year 2008 - A 2009 - A 2010 - A 2011 - A

Share Capital 156 156 157 176

Application Money 28 0 1 3
Outstanding Employees’ Stock Opti 0 0 17 5
Reserves and Surplus 2,454 1,475 3,697 5,849
Total Shareholders' Equity 2,638 1,631 3,871 6,032

Secured Loans 865 1,185 1,108 1,105

Minority Interest 5 3 0 9
Deferred Tax Liability 42 60 51 55
Total Liabilities and Shareholders' Equi 3,550 2,878 5,030 7,201

Gross Block 2,102 2,205 2,514 2,941

Less: Accumulated Depreciation/ 629 1,042 1,278 1,678
Net Block 1,473 1,163 1,236 1,263
Capital Work-in-Progress 207 348 286 317
Net Block after CWIP 1,680 1,510 1,522 1,581
Goodwill on consolidation 0 285 950 1,300
Investments 1 0 747 477
Total Fixed Assets 1,682 1,795 3,219 3,357

Sundry Debtors 1,432 1,776 1,388 2,525

Cash and Bank Balances 740 1,671 1,052 2,096
Loans and Advances 530 449 677 1,097
Total Current Assets 2,702 3,896 3,117 5,719

Current Liabilities 546 2,716 1,076 1,636

Provisions 287 97 230 238
Total Current Liabilities 833 2,813 1,306 1,875

Net Current Assets 1,868 1,083 1,811 3,844

Total Assets 3,550 2,878 5,030 7,201

Checksum (0) - - -

Balance Sheet Metrics

Current Ratio 3.24 1.38 2.39 3.05
Cash Ratio 0.89 0.59 0.81 1.12
Days Sales Outstanding (ACP) 89.60 81.71 69.23 90.10
Payable Days 53.40 221.93 96.01 90.51
Total Debt 865 1,185 1,108 1,105
Debt / Equity 0.33 0.73 0.29 0.18
ROE 19% 40% 22% 16%
BVPS 33.72 20.83 48.77 72.38
Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17
2012 - A 2013 - E 2014 - E 2015 - E 2016 - E 2017 - E

322 322 322 322 322 322

- - - - - -
5 5 5 5 5 5
7,156 9,150 11,609 14,633 18,333 22,831
7,483 9,477 11,935 14,959 18,660 23,158

- - - - - -
9 9 9 9 9 9
55 55 55 55 55 55
7,547 9,541 11,999 15,023 18,723 23,221

3,529 4,301 5,238 6,378 7,759 9,424

2,123 2,695 3,391 4,239 5,270 6,523
1,406 1,606 1,847 2,139 2,489 2,901
317 317 317 317 317 317
1,724 1,924 2,165 2,457 2,806 3,218
1,300 1,300 1,300 1,300 1,300 1,300
1,908 3,274 5,132 7,427 10,256 13,726
4,932 6,497 8,596 11,184 14,362 18,245

3,703 4,859 5,906 7,177 8,697 10,489

516 516 516 516 516 516
1,097 1,097 1,097 1,097 1,097 1,097
5,316 6,472 7,519 8,791 10,310 12,102

2,463 3,191 3,878 4,713 5,711 6,887

238 238 238 238 238 238
2,702 3,429 4,116 4,951 5,949 7,125

2,614 3,043 3,403 3,839 4,361 4,976

7,547 9,541 11,999 15,023 18,723 23,221

(0) (0) (0) (0) (0) (0)

90.10 90.10 90.10 90.10 90.10 90.10

90.51 90.51 90.51 90.51 90.51 90.51

19% 21% 21% 20% 20% 19%

KPIT Cummins
Cash Flow Statement
(All numbers in INR Millions, except per share data)
(Red for Assumptions, Blue for Actuals and Black for Calculations)
Date
Year

Net Profit /(Loss) before tax

Adjustments for:
(Profit) / Loss on sale of fixed assets (net)
Depreciation/Amortization
Interest and Financial charges
Interest income
Provision for doubtful debts/(Write back of excess provision for bad and doubtful debts)
Bad debts written of
Provision for doubtful advances/(Write back of excess provision for doubtful advances)
Employee Stock Option cost
Dividend income
Effect of exchange differences on translation of subsidiaries
Preliminary Expenses (to the extent not written-off or adjusted)
Exchange differences on translation of foreign currency cash and cash equivalents
Minority Interest
Share in Profit from Associate
Unrealised foreign exchange (gain)/loss
Operating Profit before working capital changes
Adjustments for working capital
(Increase)/Decrease in Sundry Debtors
(Increase)/Decrease in Loans and Advances
Increase/(Decrease) in Current Liabilities and Provisions
Change in Working Capital
Cash generated from operations
Direct taxes
Prior Year Taxes
Deferred Tax
Taxes Paid
Net cash from operating activities
B] CASH FLOW FROM INVESTING ACTIVITIES
Purchase of fixed assets and Intangible assets (including CWIP)
Proceeds from sale of fixed assets
Sale/(Purchase) of Mutual Fund Investments
Sale/(purchase) of Investments in shares of banks
Interest received
Dividend received
Minority Interest
Acquisition of Sparta Consulting Inc.
 Acquisition of Minority shareholding of KPIT Infosystems GmbH
Acquisition of Minority shareholding of KPIT Infosystems Inc. (SolvCentral)
Acquisition of In2soft GmbH
Acquisition of CPG Solutions Inc
Dividend received from Mutual Fund Investments
Fixed Deposit with banks (net) having maturity over three months
Net Cash from/(used in) investing activities
C] CASH FLOW FROM FINANCING ACTIVITIES
Repayment of term loan (Net)
Proceeds from issue of Share Capital
Proceeds from issue of shares on Employee Stock Option Plans
Share Issue expenses for Preferential Allotment
Application Money Received
Proceeds of upfront consideration for share warrants issued
Availment of loan
Proceeds from working capital loan (net)
Increase/(Decrease) in Finance Lease Obligation
Proceeds from Short-term loan
Dividend paid including corporate dividend tax
Proceeds from Issued/ Paid up/ Subcribed Capital
Interest & Finance Charges
Interest on Term Loan capitalized
Net Cash from/ (used in) Financing activities

Increase/(Decrease) in foreign exchange translation reserve

Exchange Differences on Translation of Foreign Currency.
Net Increase/(Decrease) in Cash and cash equivalents (A + B+ C+ D)

EOP - Cash
BOP - Cash
Cash and cash equivalents of In2soft GmbH as of date of acquisition
Cash and cash equivalents of CPG Solutions Inc. as of date of acquisition
Cash and cash equivalents of Sparta Consulting Inc. as of date of acquisition

Deposits with original maturity over three months

Deposits under lien
Cash and Cash Equivalents (Balance Sheet)
Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16
2008 - A 2009 - A 2010 - A 2011 - A 2012 - A 2013 - E 2014 - E 2015 - E 2016 - E

602 778 1,026 1,103 1,886 2,450 3,020 3,715 4,546

(3) 10 18 2 - - - - -
255 436 308 411 445 572 696 848 1,031
94 74 67 42 78 - - - -
(19) (24) (40) (32) (128) (126) (198) (286) (395)
7 43 (0) 0 - - - - -
- - 4 8 - - - - -
- - 12 (8) - - - - -
- - 17 0 - - - - -
(1) - (12) (34) - - - - -
- (1) (1) (10) - - - - -
0 0 - - - - - - -
- (16) 37 (31) - - - - -
- - - - (31) - - - -
- - - - 35 - - - -
(59) (81) 23 19 - - - - -
876 1,219 1,459 1,471 2,285 2,895 3,519 4,277 5,182

-339 -335 488 -976 -1,178 -1,156 -1,047 -1,272 -1,519

-184 -53 -169 -334 0 0 0 0 0
133 501 -488 619 827 727 687 835 998
-390 113 -169 -690 -351 -429 -359 -437 -522
485 1,332 1,289 781 1,935 2,466 3,159 3,840 4,660
- - - - - - - - -
- - - - - - - - -
- - - - - - - - -
-44 -141 -213 -249 (437) (456) (562) (691) (845)
441 1,191 1,076 532 1,498 2,011 2,598 3,149 3,815

(360) (493) (238) (469) (588) (771) (938) (1,140) (1,381)

4 (3) 1 3 - - - - -
34 1 (747) 270 - - - - -
0 0 0 0 (1,432) (1,365) (1,858) (2,296) (2,829)
19 24 46 21 128 126 198 286 395
1 0 0 0 - - - - -
0 0 0 0 - - - - -
0 - (364) - - - - - -
 0 - (182) - - - - - -
0 - (122) - - - - - -
0 - - (108) - - - - -
0 - - (355) - - - - -
0 - 12 34 - - - - -
0 (198) 159 39 - - - - -
-302 -669 -1,435 -565 (1,892) (2,011) (2,598) (3,149) (3,815)

-82 161 -237 -226 (1,105) - - - -

0 0 26 1,232 - - - - -
- - - - - - - - -
- - - (30) - - - - -
- - 1 2 (3) - - - -
19 - - - - - - - -
- - - - - - - - -
-197 161 203 128 - - - - -
1 -2 -2 6 - - - - -
- - - 39 - - - - -
-61 -64 -55 -64 - - - - -
393 - - - - - - - -
(94) (74) (68) (42) (78) - - - -
- - - - - - - - -
-22 182 -132 1,045 (1,186) - - - -

2 - - - - -
-5 16 -37 31 - - - - -
114 720 -528 1,042 -1,580 0 0 0 0

740 1,460 1,001 2,080 500 500 500 500 500

625 740 1,460 1,001 2,080 500 500 500 500
- - - -
- - - 37
- - 69 -

- 198 39 - - - - - -
- 13 13 16 16 16 16 16 16
740 1,671 1,052 2,096 516 516 516 516 516
Mar-17
2017 - E

5,526

-
1,253
-
(529)
-
-
-
-
-
-
-
-
-
-
-
6,249

-1,792
0
1,177
-615
5,634
-
-
-
(1,028)
4,607

(1,665)
-
-
(3,470)
529
-
-
-
 -
-
-
-
-
-
(4,607)

-
-
-
-
-
-
-
-
-
-
-
-
-
-
-

-
-
0

500
500

-
16
516
KPIT Cummins
Revenue Metrics
(All numbers in INR Millions, except per share data)
(Red for Assumptions, Blue for Actuals and Black for Calculations)
Date Mar-08 Mar-09 Mar-10 Mar-11
Year 2008 - A 2009 - A 2010 - A 2011 - A

Method -( Price * Quantity method)

Onsite Revenues (%) 44.90% 40.21% 40.64%

Ofshore Revenue (%) 55.10% 59.79% 59.36%

Onsite Revenue 3,561 2,942 4,158

Ofshore Revenue 4,370 4,374 6,073
Total Revenue 7,932 7,316 10,230

Development Team – Onsite 599 559 634

Development Team - Ofshore 3,674 3,753 4,723
Total Development Team 4,273 4,312 5,357

Development Team - Onsite (%) 14% 13% 12%

Development Team - Ofshore (%) 86% 87% 88%

Onsite FTE 562 512 569

Ofshore FTE 2,626 2,674 3,234
Total FTE 3,188 3,186 3,803

Employee Data
Development (at Qtr end) 4,168 4,478 5,998
Gen Mgmt / Support (at Qtr end) 357 380 414
Marketing (Subsidiaries) (at Qtr end) 51 60 102
Total (at Qtr end) 4,576 4,918 6,514

Employee Addition
Development 310 1,520
Total 342 1,596
Development as % Total 91% 95%

Onsite utilization (%) 93.81% 91.63% 89.80%

Ofshore utilization (%) 71.49% 71.24% 68.48%

Number of Hours of work / Day 8 8 8

Number of Days of Work / Month 22 22 22

Number of Hours Billed

 Onsite (Hrs) 1,186,944 1,081,344 1,201,728
Ofshore (Hrs) 5,546,112 5,647,488 6,830,208

Billing Rate (INR/Hr)

Onsite (INR/Hr) 3,000 2,721 3,460
Ofshore (INR/Hr) 788 775 889

Exchange Rate (INR/$) 45 45 45

Billing Rate ($/Hr)

Onsite ($/Hr) 66.67 60.46 76.88
Ofshore ($/Hr) 17.51 17.21 19.76

Y-o-Y (%) Increase

Onsite ($/Hr)
Ofshore ($/Hr)
Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17
2012 - A 2013 - E 2014 - E 2015 - E 2016 - E 2017 - E

48.64% 47.37% 46.89% 46.41% 45.94% 45.46%

51.36% 52.63% 53.11% 53.59% 54.06% 54.54%

7,296 9,324 11,218 13,495 16,183 19,314

7,704 10,359 12,705 15,580 19,046 23,173
15,000 19,683 23,923 29,074 35,229 42,487

813 1,019 1,190 1,390 1,618 1,875

5,466 7,204 8,415 9,827 11,442 13,258
6,279 8,223 9,605 11,217 13,060 15,133

13% 12% 12% 12% 12% 12%

87% 88% 88% 88% 88% 88%

745 924 1,080 1,261 1,468 1,701

3,968 5,081 5,935 6,932 8,071 9,352
4,713 6,006 7,015 8,193 9,539 11,053

7,071 8,223 9,605 11,217 13,060 15,133

526
122
7,719 8,969 10,469 12,219 14,219 16,469

1,073 1,152 1,382 1,612 1,843 2,073

1,205 1,250 1,500 1,750 2,000 2,250
89% 92.14% 92.14% 92.14% 92.14% 92.14%

91.64% 90.72% 90.72% 90.72% 90.72% 90.72%

72.59% 70.54% 70.54% 70.54% 70.54% 70.54%

8 8 8 8 8 8
22 22 22 22 22 22
1,573,440 1,952,259.18 2,280,405 2,663,243 3,100,771 3,592,990
8,380,416 10,731,573 12,535,394 14,639,851 17,044,945 19,750,676

4,637 4,776 4,919 5,067 5,219 5,376

919 965 1,014 1,064 1,117 1,173

45 45 45 45 45 45

103.04 106.14 109.32 112.60 115.98 119.46

20.43 21.45 22.52 23.65 24.83 26.07

3% 3% 3% 3% 3%
5% 5% 5% 5% 5%
KPIT Cummins
(Red for Assumptions, Blue for Actuals and Black for Calculations)
Date Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13
Year 2008 - A 2009 - A 2010 - A 2011 - A 2012 - A 2013 - E

Total Sales 5,835 7,932 7,316 10,230 15,000 19,683

Software Development Expenses (C 3,730 4,467 4,090 6,599 9,934 12,867

Selling and Marketing Expenses 577 688 664 762 1,115 1,465
General and Administration Expens 794 943 948 1,346 1,770 2,456
Depreciation and Amortisation 255 436 308 411 445
Interest Expense 75 45 27 13 78
Interest Income - - - - -
Other Income 199 (574) (253) 5 128
Exceptional Items - - - - 100
Provision for Taxation 76 120 169 155 437 456

Margin Analysis (% of Sales)

Software Development Expenses (C 63.9% 56.3% 55.9% 64.5% 66.2% 65.4%
Selling and Marketing Expenses 9.9% 8.7% 9.1% 7.5% 7.4% 7.4%
General and Administration Expens 13.6% 11.9% 13.0% 13.2% 11.8% 12.5%
Depreciation and Amortisation 4.4% 5.5% 4.2% 4.0% 3.0%
Interest Expense 1.3% 0.6% 0.4% 0.1% 0.5%
Interest Income 0.0% 0.0% 0.0% 0.0% 0.0%
Other Income 3.4% -7.2% -3.5% 0.0% 0.9%
Exceptional Items 0.0% 0.0% 0.0% 0.0% 0.7%
Provision for Taxation 1.3% 1.5% 2.3% 1.5% 2.9%

Efective Tax Rate (Provision for Tax 13% 15% 16% 14% 23% 18.6%
Mar-14 Mar-15 Mar-16 Mar-17
2014 - E 2015 - E 2016 - E 2017 - E

23,923 29,074 35,229 42,487

15,638 19,006 23,029 27,774

1,781 2,164 2,622 3,162
2,985 3,628 4,396 5,302

562 691 845 1,028

65.4% 65.4% 65.4% 65.4%

7.4% 7.4% 7.4% 7.4%
12.5% 12.5% 12.5% 12.5%

18.6% 18.6% 18.6% 18.6%

KPIT Cummins
(Red for Assumptions, Blue for Actuals and Black for Calculations)
Date Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13
Year 2008 - A 2009 - A 2010 - A 2011 - A 2012 - A 2013 - E

Gross Block 2,102 2,205 2,514 2,941 3,529 4,301

Less: Accumulated Depreciation/ 629 1,042 1,278 1,678 2,123 2,695
Net Block 1,473 1,163 1,236 1,263 1,406 1,606
Capital Work-in-Progress 207 348 286 317 317 317
Net Block after CWIP 1,680 1,510 1,522 1,581 1,724 1,924

Depreciation 255 436 308 411 445 572

Depreciation as % of Gross Block 12% 20% 12% 14% 13% 13%

Purchase of Asset (Capex) 360 493 238 469 588 771

Purchase of Assets as % of Revenue 6% 6% 3% 5% 4% 4%
Mar-14 Mar-15 Mar-16 Mar-17
2014 - E 2015 - E 2016 - E 2017 - E

5,238 6,378 7,759 9,424

3,391 4,239 5,270 6,523
1,847 2,139 2,489 2,901
317 317 317 317
2,165 2,457 2,806 3,218

696 848 1,031 1,253

13% 13% 13% 13%

938 1,140 1,381 1,665

4% 4% 4% 4%
KPIT Cummins
Debt Schedule
(All numbers in INR Millions, except per share data)
(Red for Assumptions, Blue for Actuals and Black for Calculations)
Date Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13
Year 2008 - A 2009 - A 2010 - A 2011 - A 2012 - A 2013 - E

Cash BOP 2,080 500

Cash Flow From Operations 1,498 2,011
Cash Flow from Investing (without investments) (460) (645)
Cash flow from Financing (without debt) (81) -
Minimum Cash Balance 500 (500) (500)
Cash available for repayment of debt 2,537 1,365

Debt
Secured Loans 865 1,185 1,108 1,105 - -
Unsecured Loans - - - - - -
Other Debt - - - - - -
Total Debt 865 1,185 1,108 1,105 - -

Debt Repayment
Secured Loans (1,105) -
Unsecured Loans - -
Other Debt - -

Cash available for investments 1,432 1,365

Investments 1 0 747 477 1,908 3,274

Interest Expense 75 45 27 13 78 -
Interest Expense Rate % #DIV/0! 5% 2% 1% 7% 4%

Interest and Dividend Income 199 (574) (253) 5 128 126

Interest and Dividend Income Rate % -34% 1% 7% 4%
Mar-14 Mar-15 Mar-16 Mar-17
2014 - E 2015 - E 2016 - E 2017 - E

500 500 500 500

2,598 3,149 3,815 4,607
(740) (853) (986) (1,136)
- - - -
(500) (500) (500) (500)
1,858 2,296 2,829 3,470

- - - -
- - - -
- - - -
- - - -

- - - -
- - - -
- - - -

1,858 2,296 2,829 3,470

5,132 7,427 10,256 13,726

- - - -
4% 4% 4% 4%

198 286 395 529

4% 4% 4% 4%
KPIT Cummins
(Red for Assumptions, Blue for Actuals And Black for Calculations)

Growth Assumptions Enterpsire Value (EV)

Long term World GDP growth rate 5.00%
Current Market Price
Diluted Shares
CAPM Assumptions Market Capitalisation (E)
Ke 16.8% Debt (D)
RFR 8.00% <++ Goi BondLess: Cash & Cash Equivalents
Beta 1.10 Net Debt
Rm 16.00% <==10 year NCurrent Enterprise Value (EV)

Calculation of Free Cash Flow

Explicit Forecast Period
2012 A 2013 E 2014 E 2015 E 2016 E

Revenues 15,000 19,683 23,923 29,074 35,229

EBITDA 2,181 2,895 3,519 4,277 5,182
EBIT 1,736 2,323 2,822 3,429 4,150
Tax Expense 437 456 562 691 845
Net Operating Profit After Tax = EBI 1,299 1,868 2,261 2,738 3,305
Depreciation & Amortisation 445 572 696 848 1,031
Working Capital Change (351) (429) (359) (437) (522)
Operating Cash Flow 1,394 2,011 2,598 3,149 3,815
Capex (588) (771) (938) (1,140) (1,381)
FCFF 806 1,239 1,660 2,009 2,434

Diluted Shares 167 167 167 167 167

Projection Year 1 2 3 4
Discount Factor 0.86 0.73 0.63 0.54
Present Value of FCF 1,061 1,217 1,261 1,308

Y/Y Growth Analysis

Revenues 31% 22% 22% 21%
EBITDA 33% 22% 22% 21%
EBIT 34% 21% 21% 21%
Depreciation & Amortisation 29% 22% 22% 22%

Margin Analysis (As % of Revenues)

EBITDA Margin 15% 15% 15% 15%
EBIT Margin 12% 12% 12% 12%
Depreciation & Amortisation 3% 3% 3% 3%
Capex -4% -4% -4% -4%

Tax Rate (Tax Expense/EBIT) 20% 20% 20% 20%

Terminal Value Calculated Equity Value

Sum of PV of FCF for explicit forecas 10,258 Total EV
WACC 17% Net Debt
WEG 5% Equity Value
Terminal Value 40,155
PV of TV 11,593

Sensitivity Analysis for the Intrinsic Price

Terminal Growth Rate (%) --- WEG

134.20 4.0% 4.5% 5.0%
14.00%
15.00%
16.00%
WACC

17.00%
18.00%
19.00%
 Debt Equity Weightage
We E/(D+E) 100.0%
123.00 Wd D/(D+E) 0.0%
167
20,500 Interest Rate (%) 7.1%
- Tax Rate (@) 23%
516
(516) WACC Calculation
19,984 WACC 16.80%

First Stage of Valuation - H Model Terminal Year

2017 E 2018 E 2019 E 2020 E 2021 E

42,487 49,584 55,931 60,910 63,955

6,249 7,293 8,227 8,959 9,407
4,997 5,831 6,578 7,163 7,521
1,028 1,199 1,353 1,473 1,547
3,969 4,632 5,225 5,690 5,975
1,253 1,462 1,649 1,796 1,886
(615) (615) (615) (615) (615)
4,607 5,479 6,259 6,871 7,245
(1,665) (1,943) (2,192) (2,387) (2,507)
2,941 3,535 4,067 4,483 4,738

167 167 167 167 167

5 6 7 8 9
0.46 0.39 0.34 0.29 0.25
1,353 1,392 1,371 1,294 1,171

3.90%
20.60% 16.70% 12.80% 8.90% 5%
21% 17% 13% 9% 5%
20% 17% 13% 9% 5%
21% 17% 13% 9% 5%

15% 15% 15% 15% 15%

12% 12% 12% 12% 12%
3% 3% 3% 3% 3%
-4% -4% -4% -4% -4%

21% 21% 21% 21% 21%

Intrinsic Value
21,851 Equity Value 22,367
 (516) Diluted Shares 167
22,367
Intrinsic Value 134.20

Rate (%) --- WEG

5.5% 6.0%
Years
KPIT Cummins
(Red for Assumptions, Blue for Actuals And Black for Calculations)

Company CMP NOS. M Cap Debt Cash EV Sales (Rs. mn)

FY12E

KPIT Cummins 123 167 20,500 - 516 19,984 15,000

Hexaware 122 299 36,478 874.31 366.06 36,986 14,505
Persistent Systems 317 40 12,680 646.87 177.07 13,150 9,854
NIIT Technologies 244 59 14,396 644.59 28.87 15,012 15,785
MindTree 480 40 19,200 649.04 34.85 19,814 19,197

EV/Revenue P/S
FY12E FY13E FY14E FY12E FY13E FY14E

Hexaware 2.55 2.06 1.79 2.51 2.03 1.77

Persistent Systems 1.33 1.18 1.05 1.29 1.14 1.01
NIIT Technologies 0.95 0.82 0.74 0.91 0.79 0.71
MindTree 1.03 0.88 0.77 1.00 0.86 0.75
Aggregate multiple - 3rd Quartile 1.64 1.40 1.23 1.59 1.36 1.20

Valuation of KPIT Based on EV/Revenue

Equity
Multiple EV Debt Cash Price
Value
FY12E EV/Revenue 1.64 24,575 - 516 25,091 150.55
FY13E EV/Revenue 1.40 27,509 - 516 28,025 168.15
FY14E EV/Revenue 1.23 29,512 - 516 30,028 180.17

Valuation of KPIT Based on EV/EBITDA

Equity
Multiple EV Debt Cash Price
Value
FY12E EV/EBITDA 8.92 19,445 - 516 19,961 119.77
FY13E EV/EBITDA 7.03 20,350 - 516 20,866 125.20
FY14E EV/EBITDA 6.52 22,945 - 516 23,461 140.76

Valuation of KPIT Based on P/S

Multiple Price Football Field
FY12E P/S 1.59 143.44
200
FY13E P/S 1.36 160.49
FY14E P/S 1.20 172.16 180
30
160
Valuation of KPIT Based on P/E
Multiple Price 140 22 151
FY12E P/E 10.88 87.91
120 128
FY13E P/E 10.09 120.71
FY14E P/E 9.47 139.63 100
80
Sales Price - Valuation
Min Max Dif 60
DCF 128 150 22
40
EV/Revenue 151 180 30
20
0
DCF EV/Revenue
 80
60
40

P/S 143 172 29 20

EV/EBITDA 120 141 21
0
P/E 88 140 52 DCF EV/Revenue
Sales (Rs. mn) EBITDA Margin EPS(Rs.)
FY13E FY14E FY12E FY13E FY14E FY12E FY13E FY14E

19,683 23,923 14.54% 14.71% 14.71% 8.08 11.96 14.75

17,974 20,659 18.20% 20.90% 20.10% 8.90 10.40 11.30
11,167 12,547 22.00% 20.40% 19.10% 34.70 35.50 36.80
18,211 20,410 17.20% 19.10% 18.10% 34.20 38.60 41.30
22,438 25,637 14.30% 14.50% 13.50% 48.30 50.30 53.20

EV/EBITDA P/E
FY12E FY13E FY14E FY12E FY13E FY14E

14.01 9.85 8.91 13.71 11.73 10.80

6.07 5.77 5.49 9.14 8.93 8.61
5.53 4.32 4.06 7.13 6.32 5.91
7.22 6.09 5.72 9.94 9.54 9.02
8.92 7.03 6.52 10.88 10.09 9.47

30
29
151
143 21
120 52

88

EV/Revenue P/S EV/EBITDA P/E

 88

EV/Revenue P/S EV/EBITDA P/E