KPIT Technologies Ltd — Regulatory Filings 2020

Jan 29, 2020

KP 11·

January 29, 2020

BSE Limited Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai - 400001 .

Scrip ID: KPITTECH Scrip Code: 542651

Kind Attn: The Manager, Department of Corporate Services National Stock Exchange of India Ltd., Exchange Plaza, C/1, G Block, Bandra - Kurla Complex, Bandra (E), Mumbai - 400051.

Symbol: KPITTECH Series: EQ

Kind Attn: The Manager, Listing Department

Subject: - Investor Update - Q3 FY 2020.

Dear Sir I Madam,

Please find enclosed the investor Update - Q3 FY 2020.

Kindly take the same on your records.

Thanking you.

Yours faithfully,

For KPIT Technologies Limited (Formerly KPIT Engineering Limited)

~ Deshpande

Nida Company Secretary & Compliance Office

Encl.: - As mentioned above.

KPIT Technologies Limited (Formerly KPIT Engineering Limited) Registered & Corporate Office: Plot No. 17, Rajiv Gandhi lnfotech Park. MIDC-SEZ, Phase- Ill, Maan, Taluka-Mulshi, Hinjawadi, Pune-411057, India. CIN: L74999PN2018PLC174192

0 +91 20 6770 6000 E info@kpit.com W kpit.com

January 29, 2020

Investor Update Q3FY20

KPIT Technologies Ltd.

1

Forward Looking Statements

Some of the statements in this update that are not historical facts, are forward-looking statements. These forward-looking statements include our financial and growth projections, as well as statements concerning our plans, strategies, intentions and beliefs concerning our business and the markets in which we operate. These statements are based on information currently available to us, and we assume no obligation to update these statements as circumstances change. There are risks and uncertainties that could cause actual events to differ materially from these forward-looking statements. These risks include, but are not limited to, the level of market demand for our services, the competitive market for the type of services and solutions that we offer, market conditions that could cause our customers to reduce their spending for our services, our ability to create, acquire and build new businesses and to grow our existing businesses, our ability to attract and retain qualified personnel, currency fluctuations and market conditions in India and elsewhere around the world, and other risks not specifically mentioned herein but those that are common to industry

Performance Overview

• Q3FY20

Q3FY20 Performance Overview

KPIT Q3FY20 Profit grows 19.3% sequentially Interim Dividend of Rs. 0.55 per share

YTD Q3FY20 Y-o-Y comparable revenue growth of 15.5% in CC terms

Q3FY20 Y-o-Y comparable revenue growth of 10.6% in CC terms

Q3FY20 annualized EPS of ₹ 6.25

Net Cash as at Q3FY20 end stood at ₹ 2,584 Million

Management Quotes

Kishor Patil, Co-founder, CEO and MD, KPIT said," The automotive and mobility sector is investing in upcoming technologies, despite falling vehicle sales. Riding on this, we have demonstrated a strong YTD Q3FY20 CC growth of 15.5% and a consistent improvement in Net Cash position. In line with our intent to increase dividend payout, we have declared an interim dividend of Rs. 0.55 per share. We are assertive of growth and consistent profitability improvement, going forward".

Sachin Tikekar, President and Whole-time Director, KPIT said," We continue to have deeper engagements with auto OEMs and Tier 1s. We have added a couple of strategic customers to our target T25 customer base. Our clients are partnering with us for long term mutually rewarding technology engagements. We have substantially increased the opportunities, bolstered by some sizable deals, which gives us the confidence of good profitable growth in the coming quarters".

Q3FY20 Additional Fast Facts

• 1. As at end of Q3FY20, Net Cash stood at ₹ 2,584 Million as compared to ₹ 2,041 Million last quarter.
• 1. Gross Debt down by ₹ 348 Million. Short Term Debt completely repaid during the quarter.
• 1. DSO as at the quarter-end came down to 64 days from 67 days last quarter
• 1. Q3FY20 PAT stood at ₹ 428.5 Million as against ₹ 359 Million last quarter
• 1. Reported EBITDA of 13.4% for Q3FY20 as against 13.4% for Q2FY20
• 1. Q3FY20 reported revenue of USD 76.88 Million
• 1. Fully Diluted EPS for the Quarter stood at ₹ 1.56

Cash Flow –	Major Movement
INR Mln Cash Profit – Decrease in Working Capital –	712 232
Capex – 210 Loans repaid – 357 MicroFuzzy deferred Consideration - 176
Cash and Cash Equivalents break-up	' ' INR ' ' ' ' ' ' Million ' ' ' '
In Investment Accounts	1,289
In Operating Accounts	1,828
TOTAL	3,117

Q-o-Q Increase in Net Cash of INR 543 Million

NET CASH (INR Mln)	Q3FY20	Q2FY20
Gross Cash	3,117	2,922
Long Term Debt	533	528
Short Term Debt	NIL	353
NET CASH	2,584	2,041

1/29/2020 7 KP 11· FCF = Cash Flow from Operations minus capex

Movement in Profit – Q2FY20 to Q3FY20

Major One-time Items in Q3FY20

The current quarter tax provision is lower due to consolidation of taxable income for our Germany entities. Though this will be an ongoing feature, since this quarter has a cumulative impact, there is a one-time element which has reduced the Effective Tax Rate by approximately 1.5%

With regard to the disinvestment of the business related to telematics hardware products consisting VTS - AIS 140 and OBITS (On Bus Integrated Telematics Systems) to Minda Industries Ltd. :

The initial consideration of ₹ 170.0 million was accounted for in Q1FY20 An expense of ₹ 18 million was accounted for in Q2FY20 and

An expense of ₹ 31.2 million is accounted for in Q3FY20

the same are accounted for as Exceptional Items in the respective quarters.

Major Deal Wins

A leading Japanese Car Manufacturer selected KPIT for multiple projects in the connectivity and infotainment domain

A leading European Car Manufacturer selected KPIT for a project in ADAS domain

A leading German Tier I Supplier selected KPIT for a project in the AUTOSAR domain

A leading Asian Tier I Supplier selected KPIT for a project in the Autonomous Driving domain

A leading American Tier I Supplier selected KPIT for a project in the electric powertrain domain

Updates

Thought Leadership Updates

October 2019

AESIN Conference 2019

Nishant Tholiya, VP Conventional & Electric Powertrain at KPIT, shared his insights on "Software Re-architecture and ECU Virtualization" at AESIN Conference, 2019.

Diagnostics Conference 2019

"Guests from all over mobility industry participated in the 5th edition of KPIT's Conference on Diagnostic Future Trends ,held in Munich on 22nd Oct 2019.

October 2019

Continental with KPIT

Alexander Klotz, Rosemary Joshy from Continental and KPIT's Omkar Panse shared their visions on Connected Mobility and role of technology & software in Bengaluru

November 2019

Other Updates

Business Book of the Year Award

November 2019

"Leapfrogging to Pole-vaulting" a book by our Chairman and Group CEO Mr. Ravi Pandit and eminent scientist Dr. Raghunath Mashelkar won "Business Book of the Year" award at the prestigious "Tata Literature Live! The Mumbai LitFest 2019" awards

Adam Smith Awards Asia 2019

KPIT received the Adam Smith Award for the Best AR Solution at Raffles Hotel in November 2019

• Singapore

Jerry White @ KPIT

"True excellence is when you look beyond oneself"- Nobel laureate Jerry White in conversation with our chairman Ravi Pandit shared his inspiring story with KPIT Leadership

Geography Update

EUROPE	US	ASIA
Further job cuts expected in EU	New car sales are expected to	OEMs increasingly looking at
auto sector even in 2020	be further down in 2020	software Tier I capabilities and
Old technologies spend cut to	Spend on Connectivity, ADAS,	preferring value over cost
aid spend on Electric & ADAS	Diagnostics & AUTOSAR rising	AD, epowertrain & connectivity
Investing in creating newer	Positioned as solutions provider	Continue to build leadership in
platforms & deepening expertise	with scalability to leverage OEMs	AD/ADAS, Connected Cars and
in AD	sourcing s/w independently	ePowertrain
Sales focus on joint OEM Programs and large programs Concentrating on Strategic Accounts and pursuing CV vertical in focus practice area	Continue to build leadership, domain expertise and drive innovation in key focus areas of epowertrain, AD-ADAS, connectivity, diagnostics and AUTOSAR	Continue to concentrate on Strategic Accounts where the traction is very good. Increasing focus on Commercial Vehicles and AUTOSAR

Industry Updates and KPIT readiness

New Technology Investments – Major Mobility Players

JLR made \$1.2 billion investment to build electric cars in Britain		VW invested \$1 billion in Northvolt AB, Swedish battery cell producer in joint battery activities			BMW and Daimler will spend over \$1 billion on the future of transportation
DENSO made \$1.6 billion strengthen development and production of automotive electrification		investment to	Traton	billion	Group plans R&D expenditure of \$1 by 2024
Mercedes-Benz & Geely have established a global joint venture "smart Automobile Co., Ltd." with capital of \$780 Mn		Daimler Trucks has started testing of highly automated heavy-duty trucks on Virginia Highways			GM announced plans to invest \$1.5 billion to bring its next generation of midsize pickup trucks to market
Hyundai and Kia Motors are investing € 100 million in a development partnership with UK-based electric vehicle startup Arrival			VW Group		plans to invest around € 60 billion between 2020 and 2024for future mobility solutions development which will include hybridization, electric mobility and digitization
		technology focused niche players like KPIT			Technology Investments are driving high growth and predictability for

We are well positioned for these Opportunities

McKinsey &Company

July 2019 : KPIT features in report on "Automotive software and electronics 2030"

3.4 New partnerships and cooperation models are emerging primarily for software- and ,electronics-related topics

closely tog1ether. One example would be the dose collaboration of BMW, FCA, Intel, Magna, Aptiv, Continental, LiDAR supplier lnnoviz, and SW specialists TTTech and KPIT to jointly develop an A D platform. !Baidu is trying to lbuild an open platforrn for AD with its OEM, tier-1 supplier, tier-2 supplier, and research institution part ners, sharing source code and data.

April 2019 : Automotive Software Global Market Outlook report by Research and Markets

According to this. research, the ma111ket accounted for \$15.53 billion in 2017 and is expected tc reach \$82.58 bi llion b 2026 growing at a CAGR of 20.4% during the forecast 11eriod. Factors

Some of the k,ey players. profilled ·n the mariket include NXP, Aimotiiive,, Airbiquiity,, Apple, Autone Mobille, Blackberry, El,ektirobit, Google, Green IHill s Software, K it Technologie~, lilllxoft Microsoft Corpora· ion,, NVI DIIA, IRenesas. Electronics., Riightware, Robert Bosch,, SaferidE Technologies Ltd, S g1ma Softwar,e Group, V,ector llnformatik and Wind IRiiver System ..

KPIT is ready and vibrant

Reimagining mobility with you for creation of a cleaner, smarter & safer world

Sharp Focus on Automotive and Mobility -

More than 2 decades of work in embedded software for automotive

Focused Investments in technology

Several Million	300+	12	10+
Vehicles use KPIT software	Vehicle production Programs	Out of the top 15 Car OEMs as customers	Customers for more than a decade

Financial and Operational Data

• Snapshot

Profit & Loss Account Snapshot INR MN

DETAILS	Q3FY20	Q2FY20
Revenue from Operations	5,500.92	5,440.98
Other Income	101.79	90.03
Total Income	5,602.71	5,531.01
Operating Expenses	4,764.06	4,714.31
EBITDA	736.86	726.67
Depreciation	283.22	265.08
EBIT	453.64	461.59
Finance Costs	48.12	59.31
Change in FMV of Investments	5.62	(63.53)
Profit Before Exceptional Items	512.93	428.78
Exceptional items	(31.2)	24.92
PBT	481.73	453.70
Tax	72.39	86.40
PAT	409.34	367.30
Profit Attributable to owners of company	428.53	359.12
Profit Attributable to non-controlling interest	(19.19)	8.18

Balance Sheet Snapshot

ASSETS	Q3FY20	Q2FY20
NON-CURRENT ASSETS
Property, Plant & Equipment	2,140.08	2,202.17
Right-of-use Assets	1,427.97	1,387.28
Other Tangible Assets	48.43	13.50
Goodwill & Other Intangibles	1,579.20	1,636.51
Other Non-Current Assets	640.97	551.30
TOTAL NON-CURRENT	5,836.65	5,790.76
CURRENT ASSETS
Inventories	174.82	170.64
Cash and Cash Equivalents	3,116.88	2,922.19
Trade Receivables	4,731.30	4,509.65
Other Current Assets	1,944.07	2,375.05
TOTAL CURRENT	9,967.07	9,977.53
TOTAL ASSETS	15,803.72	15,768.29

EQUITY & LIABILITIES	Q3FY20	Q2FY20
Equity Share Capital	2,687.37	2,685.02
Other Equity	7.636.78	7,103.72
Equity attributable to owners	10,324.15	9,788.74
Non-controlling interests	25.22	43.37
TOTAL EQUITY	10,349.37	9,832.11
NON-CURRENT LIABILITIES
Borrowings	178.07	176.43
Lease Liabilities	966.71	979.37
Other Non-Current Liabilities	252.81	398.62
TOTAL NON-CURRENT	1,397.59	1,554.42
CURRENT LIABILITIES
Borrowings	355.09	705.27
Trade Payables	1,080.64	1,046.38
Lease Liabilities	283.73	241.56
Others	2,692.39	2,388.55
TOTAL CURRENT	4,056.76	4,381.76
TOTAL EQUITY AND LIABILITIES	15,803.72	15,768.29

INR MN

Revenue Break-up

Geography	Q3FY20	Q2FY20	Q3FY19	Q-o-Q	Y-o-Y
US	30.72	34.19	28.20	(10.2)%	8.9%
Europe	31.44	27.55	29.82	14.1%	5.4%
Asia	14.72	15.49	12.26	(4.9)%	20.1%
TOTAL	76.88	77.23	70.28	(0.5)%	9.4%
Verticals	Q3FY20	Q2FY20	Q3FY19	Q-o-Q	Y-o-Y
Passenger Cars	58.31	58.58	53.74	(0.5)%	8.5%
Commercial Vehicles	17.51	17.16	13.94	2.0%	25.6%
New Mobility	0.62	0.78	0.43	(21.2%)	43.4%
Others	0.45	0.71	2.17	(36.3)%	(79.2)%
TOTAL	76.88	77.23	70.28	(0.5)%	9.4%
Practices	Q3FY20	Q2FY20	Q3FY19	Q-o-Q	Y-o-Y
Powertrain	25.02	28.64	17.89	(12.6)%	39.9%
AD-ADAS	18.99	15.29	15.99	24.2%	18.7%
Connected Vehicle	9.94	9.88	13.89	0.7%	(28.4)%
Others	22.92	23.42	22.51	(2.1)%	1.8%

P&L Metrics

	Q3FY20	Q2FY20	Q3FY19	Q-o-Q	Y-o-Y
Revenue by Contract Type
Time & Material Basis	45.6%	54.4%	51.5%	(16.6%)	(3.1%)
Fixed Price Basis	54.4%	45.6%	48.5%	18.8%	22.7%
Customers
Strategic T25 Customer Revenue	83.95%	84.4%	79.9%	(1.0)%	14.9%
Active Customers	55	55
Revenue per Devp. Employee USD	45,403	45,647
EBITDA Margin	13.4%	13.4%
EBIT Margin	8.2%	8.5%
PAT Margin	7.8%	6.6%
Effective Tax Rate	15.0%	19.0%
EPS (Basic)	1.59	1.34
EPS (Diluted)	1.59	1.33

Currency wise revenues, Hedging Details

Currency wise revenue	Q3FY20	Q2FY20	Q3FY19
USD	41.4%	45.8%	41.7%
EUR	33.5%	28.1%	30.8%
GBP	6.7%	7.3%	10.4%
JPY	10.9%	11.0%	10.1%
INR	4.9%	5.1%	4.6%
Others	2.7%	2.9%	2.5%

Realized Rate	Q3FY20	Q2FY20	Q3FY19
INR/USD	71.55	70.45	70.81

Hedge Details	Q3FY20
Hedge Rates
USD/INR	72.40
EUR/INR	81.20
GBP/INR	93.45
Hedge Amounts(Mn)
USD/INR	19.45
EUR/INR	5.75
GBP/INR	4.70

Headcount Data

Period End Headcount	Q3FY20	Q2FY20	Q3FY19	Q-o-Q	Y-o-Y
Development	6,773	6,768	-	-	-
Enabling & Sales	530	527	-	-	-
Total	7,303	7,295	-	-	-

Contact us

• Contact

Conference Call Details - TBU

Conference name Date Time	: KPIT Technologies Q3 FY2020 Post Earnings Conference Call : Thursday January 30, 2019 : 1630 Hrs.
Participants	: Mr. Kishor Patil, Co-founder, CEO & MD Mr. Sachin Tikekar, President & Board Member Mr. Vinit Teredesai, CFO Mr. Sunil Phansalkar, AVP & Head-IR
Dial-in Numbers for all participants
Primary number	: +91 22 6280 1116
Local Access	: +91 22 7115 8017
International Numbers	: USA - 1 866 746 2133 UK - 0 808 101 1573 Singapore - 800 101 2045 Hongkong - 800 964 448

About KPIT Technologies

KPIT (BSE: 542651; NSE: KPITTECH), is a global technology company providing software solutions that help mobility companies leapfrog towards autonomous, clean, smart and connected future. With 7,000+ Automobelievers across the globe, specializing in embedded software, AI & Digital solutions, KPIT enables customers accelerate implementation of next generation mobility technologies. For more information, visit http://www.kpit.com 27

Contact

For Investor Queries

Email Sunil.Phansalkar@kpit.com

Desk Phone + 91 20 6770 6997

Cell + 91 98509 66011

Website www.kpit.com

1/29/20208

Sunil Phansalkar 0 J •

Contact

For Media Queries

Email Sunil.R@kpit.com

Desk Phone + 91 80 6606 6000 (7865)

Cell + 91 99001 50180

Website www.kpit.com

1/29/20209

Sunil B R 0 J •

Thank You