A global brokerage firm gave a buy recommendation on the shares of the leading IT company with an upside of 27% and expects revenue growth of 18-22% for FY25.
KPIT is a global technology business that provides embedded software and product engineering services to automotive companies.
KPIT Technologies is a global leader in the business of software integration for the mobility industry, particularly focusing on the transformation towards Software Defined Vehicles (SDVs).
Over the past six months, the company’s shares have yielded a solid return of 23%, followed by an impressive 59% over the course of the last twelve months.
In a quarter-to-quarter comparison, operational revenue saw a notable uptick of 5%, rising from Rs 1,257 crore in Q3FY24 to Rs 1,318 crore in Q4FY24. Furthermore, net profit experienced a 5.8% increase, climbing from Rs 157 crore to Rs 166 crore.
In Q4 FY24, the company’s EBITDA stood at a notable 20.7%, reflecting a substantial increase of 160 basis points compared to the same period last year.
During the recent financial year of FY23-24, the company’s revenues soared to $587 million or Rs 4,872 crore, driven by robust growth across diverse business segments. Particularly noteworthy was the constant currency (CC) revenue surge of 39.1%, surpassing the heightened guidance set for the year by the company.
Looking forward to FY25, KPIT management envisions sustaining robust growth, with projected Constant Currency revenue growth ranging from 18% to 22%.
With a keen focus on operational excellence and forward-thinking strategies, the company aims to uphold an EBITDA margin of 20.5% or higher. Additionally, KPIT revealed an impressive total contract value (TCV) of $261 million for newly secured engagements in Q4 FY24.
A global brokerage firm, Goldman Sachs has raised a ‘buy’ rating on KPIT Technologies Ltd with a target price of Rs 1,900 per share from Rs 1,850 per share, representing an upside potential of up to 27%, based on Tuesday’s closing price of Rs 1,494.
The brokerage expressed optimism, noting that the company projected a revenue growth of 18-22% for FY25, Additionally, it disclosed the company’s intention to allocate 1.7% of its FY25 revenue towards a new ESOP program. Factoring in this investment, the brokerage suggested that the FY25 EBITDA margin could potentially exceed 22.2%, surpassing the previously guided range of over 20.5%.
On Wednesday’s early trade, KPIT Technologies Ltd. shares were trading at Rs 1,497 per share, up 0.20 percent from the previous close price on the National Stock Exchange. The company has a market capitalization of Rs 41,041 crore.
Written by Omkar Chitnis
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