KPIT Says Merger with Birlasoft is on Track. Strong Q4 FY18 Performance in its PES Unit

/ May 24, 2018/ Automotive, Financials, KPIT, M&A (large, with revenues above $50m)

KPIT released yesterday its Q4 FY18 and full-year FY18 results. The company had a superb performance in Q4 FY18 in its PES business, whose revenues were up 29%. PES is now KPIT’s largest unit, representing 36.3% of revenues. The PES unit largely services the automotive sector, and revenues from the Automotive & Transportation sector were up 21.4% as a result in Q4. Automotive & Transportation is the largest vertical of KPIT, so this is quite a performance. Clearly, the PES unit is the jewel of KPIT.

KPIT announced it was on track with the merger with Birlasoft, from a regulatory perspective. This announcement was a surprise, given the fact that the promoters (i.e. the owners of Birlasoft and KPIT) only secured 2.4k shares of the 5.1m they were looking to acquire at the end of the open offer.

I had assumed the process was dead. Well, not quite. If shareholders express during an EGM their agreement to the merger, well the merger will go ahead, whatever number of shares promoters have. KPIT’s share is now trading at INR 271, well above the INR 182 of the promoters’ offer. In other words, shareholders have faith in the company and in the proposed merger. The merger with Birlasoft, against all odds, now seems likely! Wait and see.


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