Shares of automotive software firm KPIT Technologies have clocked multibagger returns for period above two years. The company, which reported its Q1 earnings last week, saw its stock gaining 225%, 515% and 2,080% in two years, three years and five years, respectively. KPIT Technologies shares ended on a flat note at Rs 1,802.05 on Monday. Market cap of the firm climbed to Rs 49,402 crore on BSE.
Total 6.17 lakh shares of the firm changed hands amounting to a turnover of Rs 110.33 crore. Shares of KPIT Technologies are trading higher than the 20 day, 30 day, 50 day, 100 day,150 day and 200 day but lower than the 5 day and 10 day moving averages.
In a year, the stock has gained 68.16 per cent and risen 21 per cent this year.
The stock hit a 52-week low of Rs 1038.50 on September 26, 2023 and a record high of Rs 1928.75 on July 12, 2024. It has lost 6.56% from record high till date.
The company reported its Q1 earnings last week.
KPIT Technologies clocked a 52.4 per cent year-on-year (YoY) rise in net profit for the June 2024 quarter. Net profit climbed to Rs 204.2 crore in Q1, helped by a one-time income gain of Rs 39.6 crore as compared with Rs 13.4 crore a year ago.
The automotive-focused software services provider's revenue climbed 24.3 per cent YoY to Rs 1,364 crore in Q1FY25 compared to Rs 1,097.6 crore a year ago. Operating margins improved to 17.3 per cent in Q1FY25, while its deal wins during the first quarter stood at a total contract value (TCV) of $202 million.
Phillip Capital has maintained a buy call post Q1 earnings. It has raised its price target to Rs 2,210 (Rs 1,940 earlier).
“Despite increased competition from pure-play ER&D players & Tier I IT vendors, mgmt remains confident in its growth prospects, citing strong capabilities and relationships. Seven out of top 10 OEMS have embarked on SDV journey (KPIT Tech has announced two large deals) and mgmt sees continued headroom for growth in its T25 clients for SDV related spend. New age areas like ADAS and autonomous, hybrid and electric mobility, infotainment and connected, and safety systems will see 12-14% CAGR, over next four years, domains where KPIT Tech has strong capabilities. We continue to see KPIT as a long-term play on disruption in auto industry. Maintain BUY,” said the brokerage.
“We increase our FY25-26 PAT estimates by 0-2% as we upgrade our growth estimates. We also introduce FY27 estimates. We now expect 22%/21%/21% CC y-o-y revenue growth and 20.5%/21.5%/22% EBITDA Margins in FY25/26/27. We roll forward our target to avg of FY26-27 EPS and continue to value KPIT Tech at 50x (1.6x PEG) to arrive at our price target at Rs 2210 (Rs 1940 earlier),” it added.
Kotak Securities has maintained its sell call with a price target of Rs 1,150.
"The automotive sector is going through challenges due to demand and profitability pressures, which could constrain R&D spends for a few clients. At 50 times FY2026E earnings, KPIT stock is extremely expensive. We tweak our EPS estimates by 1-4 per cent over FY2025-27E," it said.
KPIT sustained its growth momentum in 1Q. Revenues grew 4.7% cc QoQ, meeting elevated expectations. Honda deal continues to ramp, reflected in 13 per cent QoQ growth in Asia. Deal wins were healthy at $202 million, taking the book-to-bill to 1.3 times, said JM Financial. KPIT’s revenue growth, despite 1.3 times book-to-bill indicates minimal leakage and faster ramp, it said.
JM Financial has a buy call with a price target of Rs 2,140 on the KPIT Technologies stock.
"Current order book is sufficient to achieve an unchanged 18-22 per cent constant currency revenue growth for FY25, per the management. Better margins despite two months of ESOP expense and consistent improvement in employee productivity reflect KPIT’s pricing power. We build this in our margin assumptions driving 1-2 per cent EPS upgrades," it said with a target price of Rs 2,140 and buy rating.
Choice Broking has assigned a price target of Rs 1980 and maintained its buy rating.
“KPIT expects creation of meaningful growth opportunities via investments in differentiated offerings and adjacencies and continue with the growth momentum, paving way for a fair demand visibility in the medium term. We maintain our BUY rating and arrive at a revised target price of Rs 1,980 implying a P/E of 50 times on FY26E EPS of Rs 40,” said the brokerage.
Axis Securities has assigned a price target of Rs 2,150 against the earlier Rs 1,750 per share.
The management has highlighted robust and broad-based growth across various verticals, supported by a solid deal pipeline and enhanced client engagement. Total Contract Value (TCV) remained strong in Q1FY25, with deal wins amounting to $202 million.
The management is optimistic about gaining medium-term demand momentum due to deals secured in previous quarters and anticipates improvements in margins.
The brokerage said the firm has a strong revenue growth momentum backed by robust deal wins and strong addition of capabilities. FY25 revenue growth guidance has been retained at 18% to 22%. EBITDA Outlook retained at 20.5% plus.
The current valuation of the KPIT stock is 58x FY26E P/E against the earlier valuation of 47x FY26E.