Equity L/S Analyst | Forensic Accounting | India, Yellowstone Equity

Ankit Agrawal, CFA

Equity L/S Analyst | Forensic Accounting | India

Creating Wealth through Alpha and Compounding

Yellowstone Equity

Providing unbiased and independent research on Indian equities to global institutions and individual investors


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Regulatory Disclosure: 
Note that Ankit Agrawal (Proprietor of Yellowstone Equity) is a SEBI registered Research Analyst (Registration No.: INH000007216). Registration granted by SEBI and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors. Investment in securities market are subject to market risks. Read all the related documents carefully before investing.

Research Analyst Contact Details:
Address: A-412, Shilp Aaron, Sindhu Bhavan Road, Ahmedabad, Gujarat - 380059
Email: services@yellowstoneequity.com
Mobile: +91-7575817289

Compliance/Grievance Officer:
Name: Ankit Agrawal
Email: services@yellowstoneequity.com
Mobile: +91-7575817289
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Equity Bottom-Up

<ul>
<li>KPIT reported a strong Q4FY23 with 8.5% QoQ growth in CC (Constant Currency) terms. Q4FY23 EBITDA margin at 19.1% came in higher than 18.5%+ expected.</li>
<li>Deal TCV came in highest ever helped by a mega deal of INR $250mm. Even excluding the mega deal, the deal TCV was healthy at $173mm vs $150mm+ typically.</li>
<li>KPIT has guided for an upbeat FY24. FY24 revenue growth is guided to be 27-30% in CC terms. FY24 EBITDA margin is guided at 19-20% vs 18.9% in FY23.</li>
</ul>


KPIT reported a strong Q4FY23 with 8.5% QoQ growth in CC (Constant Currency) terms. Q4FY23 EBITDA margin at 19.1% came in higher than 18.5%+ expected.
Deal TCV came in highest ever helped by a mega deal of INR $250mm. Even excluding the mega deal, the deal TCV was healthy at $173mm vs $150mm+ typically.
KPIT has guided for an upbeat FY24. FY24 revenue growth is guided to be 27-30% in CC terms. FY24 EBITDA margin is guided at 19-20% vs 18.9% in FY23.


KPIT Tech: Strong Q4FY23 and Upbeat FY24 Guidance

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Equity Capital Markets

Tata Technologies / Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/tata-technologies" target="_blank" data-smartkarma-citation="entities:23700:1" rel="noopener">Tata Technologies (TATATECH IN)</a>, the largest India-based ER&amp;D (engineering research and development) service provider, is seeking to raise up to US$600 million, according to press reports.</li>
<li>In <strong><em><a href="https://www.smartkarma.com/insights/tata-technologies-ipo-the-bull-case" target="_blank" data-smartkarma-citation="insights:101409" rel="noopener">Tata Technologies IPO: The Bull Case</a></em></strong>, we highlighted the key elements of the bull case. In this note, we outline the bear case.</li>
<li>The key elements of the bear case rest on below-peer revenue growth, high contract assets, growth reliant on VinFast, mid-tier profitability, and high attrition rates.   </li>
</ul>



Tata Technologies (TATATECH IN), the largest India-based ER&amp;D (engineering research and development) service provider, is seeking to raise up to US$600 million, according to press reports.
In Tata Technologies IPO: The Bull Case, we highlighted the key elements of the bull case. In this note, we outline the bear case.
The key elements of the bear case rest on below-peer revenue growth, high contract assets, growth reliant on VinFast, mid-tier profitability, and high attrition rates.   


<ul>
<li>
<a href="https://www.smartkarma.com/entities/tata-technologies" target="_blank" data-smartkarma-citation="entities:23700:1" rel="noopener">Tata Technologies (TATATECH IN)</a>, the largest India-based ER&amp;D service provider, is seeking to raise up to US$600 million, according to press reports.</li>
<li>Tata Technologies ranked first among India service providers and third globally among rated service providers for automotive ER&amp;D services, according to Zinnov.</li>
<li>The key elements of the bull case rest on its automotive leadership positioning, solid performance of the core business, high repeat rates, rising margin and cash generation. </li>
</ul>



Tata Technologies (TATATECH IN), the largest India-based ER&amp;D service provider, is seeking to raise up to US$600 million, according to press reports.
Tata Technologies ranked first among India service providers and third globally among rated service providers for automotive ER&amp;D services, according to Zinnov.
The key elements of the bull case rest on its automotive leadership positioning, solid performance of the core business, high repeat rates, rising margin and cash generation. 


<ul>
<li>KPIT reported strong Q3FY23 earnings with organic revenue growth of 24.6% YoY and 4.9% QoQ. Including Technica acquisition, revenue growth was 17.3% QoQ and 31.9% YoY in $ terms.</li>
<li>EBITDA margin stayed steady QoQ at 18.5%. Deal wins were strong with Q3FY23 TCV of $272mm. KPIT is on track to beat its prior FY23 growth outlook.</li>
<li>Despite caution in the IT services sector, KPIT is seeing robust demand as automotive OEMs continue to spend on new automotive tech R&amp;D. </li>
</ul>


KPIT reported strong Q3FY23 earnings with organic revenue growth of 24.6% YoY and 4.9% QoQ. Including Technica acquisition, revenue growth was 17.3% QoQ and 31.9% YoY in $ terms.
EBITDA margin stayed steady QoQ at 18.5%. Deal wins were strong with Q3FY23 TCV of $272mm. KPIT is on track to beat its prior FY23 growth outlook.
Despite caution in the IT services sector, KPIT is seeing robust demand as automotive OEMs continue to spend on new automotive tech R&amp;D. 


Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Event-Driven

<ul>
<li>Near the end of the review period, we see 7 stocks moving from MidCap to LargeCap, 6 from LargeCap to MidCap, 8 from SmallCap to MidCap and vice versa.</li>
<li>One spin-off should be added to the MidCap segment, while a bunch of recent listings will be added to the SmallCap segment.</li>
<li>Stock migrating upwards have outperformed stocks migrating downwards and we expect there could be some mean reversion from the middle of January.</li>
</ul>


Near the end of the review period, we see 7 stocks moving from MidCap to LargeCap, 6 from LargeCap to MidCap, 8 from SmallCap to MidCap and vice versa.
One spin-off should be added to the MidCap segment, while a bunch of recent listings will be added to the SmallCap segment.
Stock migrating upwards have outperformed stocks migrating downwards and we expect there could be some mean reversion from the middle of January.


AMFI Stock Reclassification Preview (Dec 2022): A Bunch of Migrations

India

KPIT Technologies Limited is a global technology company specializing in software solutions for the automotive and mobility industry. The company provides embedded software, artificial intelligence, and digital solutions, focusing on next-generation technologies like autonomous driving, electric mobility, connected vehicles, and vehicle diagnostics. Headquartered in Pune, India, the company was founded in 1990.

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KPIT Technologies (KPITTECH IN)

KPIT Tech: Strong Q4FY23 and Upbeat FY24 Guidance

KPIT reported a strong Q4FY23 with QoQ growth of 8.5% in Constant Currency terms. Margins also came in better than expected. Furthermore, KPIT has...

Ankit Agrawal, CFA

Tata Technologies IPO: The Bear Case

The key elements of the bear case rest on below-peer revenue growth, high contract assets, growth reliant on VinFast, mid-tier profitability, and...

Arun George

Tata Technologies IPO: The Bull Case

The key elements of the bull case rest on its automotive leadership positioning, solid performance of the core business, high repeat rates, rising...

Arun George

KPIT: On Track to Beat FY23 Guidance

KPIT reported strong growth in line with our thesis. It is on track to beat its prior FY23 guidance. A mega deal of $100mm+ is also in the offing.

Ankit Agrawal, CFA

AMFI Stock Reclassification Preview (Dec 2022): A Bunch of Migrations

Near the end of the review period, we see 7 stocks moving from MidCap to LargeCap, 6 from LargeCap to MidCap, 8 from SmallCap to MidCap and vice...

Brian Freitas

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