Feature

Sitting pretty

KPIT’s niche business model and attractive valuation make it a sound bet

Soumik Kar

Kishor Patil can’t help but gush over Zindagi Na Milegi Dobara, the 2011 Bollywood flick about three friends who live life to the fullest. “The pinnacle of the movie is the bull run [scene]. It is sometimes very important to just take the plunge. If you believe in yourself, you will not only come out victorious but you will have stronger determination and confidence in your capabilities,” says the managing director of Pune-based IT company KPIT Technologies. 

It’s easy to see why the 51-year-old identifies with that scene. Over 20 years ago, Patil and Ravi Pandit, now chairman of KPIT Technologies, took a bold plunge when they moved away from their chartered accountancy backgrounds to start an IT services business. Over the years, they managed to scale it up to a multi-million dollar company, aided along the way by carefully thought-out acquisitions. 

Earlier this month, KPIT Cummins Infosystems went in for a makeover. The company dropped Cummins from its name, adopted a new logo and rechristened itself as KPIT Technologies to reflect the upcoming changes in its business model. While Cummins continues to be its top client and one of its strategic partners, the name change is more reflective of how the company has grown beyond its key customer, with plans to grow its technology business — which develops patented products and solutions — to bring in half of its revenues over the next couple of years. 

The technology business currently accounts for a third of revenues, while business IT accounts for the balance. KPIT has invested in developing products and solutions in embedded software and auto electronics. The move is also to consolidate operations across its acquired companies and bring more consistency across its offerings to clients as a single brand as it sets its eyes on a higher target. “By 2017, we hope to become a $1-billion company by revenues, and we wanted a new identity that would reflect our bold and aggressive thinking,” says Patil.

Early on in its journey, its 2002 acquisition of the IT arm of Cummins Inc, which now holds around 6%, defined the company’s roadmap. Through this journey, KPIT realised that while competing with larger companies on deals is a challenge by itself, taking them on in areas where they have built a strong foothold, such as banking and

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