KPIT is a global technology company with software solutions that will help mobility leapfrog towards an autonomous, clean, smart, and connected future. With 13000+ Automobelievers across the globe, specializing in embedded software, AI & Digital solutions, KPIT enables customers to accelerate the implementation of next-generation mobility technologies. With development centers in Europe, the USA, Japan, China, Thailand, and India. KPIT Technologies is a global partner to the automotive and Mobility ecosystem for making software-defined vehicles. It is a leading independent software development and integration partner specializing in embedded software, AI, and digital solutions.
Product Segment
1) Feature Development & Integration (62%): Electrification, AD-ADAS, Body Electronics and VED.
2) Architecture & Middleware Consulting (19%): Middleware and AUTOSAR.
3) Cloud-Based Connected Services (19%): Intelligent Cockpit, Digital Connected Solutions and Diagnostics.
Revenue Split
1. Verticals: The company’s revenue is primarily driven by Passenger Cars (Rs. 1,174 crore) and Commercial Vehicles (Rs. 241 crore) in the Automotive segment, with the former seeing 26.4% year-over-year growth.
2. Business Units: Feature Development & Integration (Rs. 873 crore) and Architecture & Middleware Consulting (Rs. 338 crore) are the two largest contributors, with the former growing 15.2% year-over-year.
3. Geography: The US (Rs. 402 crore) and Europe ( Rs. 714 crore) are the top revenue-generating regions, while Asia (Rs. 346 crore) saw a significant 66.6% year-over-year increase.
Overall, the data highlights Kpit’s diversified revenue streams and the relative performance of its different business segments and geographic markets.
Client Concentration
The company derives its entire revenue from the auto sector, its strategic clients (T25) accounted for ~85% of its revenues in FY24, thus exposing it to concentration risks. The risk is mitigated with established relationships with global auto OEM clients and its niche technological capabilities in mobility solutions.
R&D
The company has developed a cloud-based test automation testing platform for end-to-end integrated system testing. Overall it has been granted 68+ patents.
Price Action
In Friday’s trade, the shares of KPIT Technologies Limited closed at Rs. 1,369 down by 3% from its previous close of Rs. 1,411. The stock currently holds a market cap of Rs. 37,535 crore.
Valuation
KPIT Technologies Limited is currently trading at a P/E ratio of 53.35 compared to the industry P/E of 41.33 This shows the stock to be trading at a slightly premium valuation as compared to the industry.
Future Outlook
For FY25, the company expects to deliver CC revenue growth of 18%-22% with EBITDA margins of 20.5%+. The company is willing to focus on Strategic Client Partnerships, Technology Innovations, People, and Zero-Defect Deliveries. It also plans to invest in technology areas like cross-practice offerings, AI adoption, and expansion in Asia.
Financial Outlook
Revenue from Operations: The company’s revenue increased from ₹13,846.30 crore in Q1 FY25 to ₹14,714.13 crore in Q2 FY25, reflecting a year-over-year growth of 6.3%.
EBITDA: The company’s EBITDA improved from ₹2,881.60 crore in Q1 FY25 to ₹3,064.11 crore in Q2 FY25, indicating enhanced operational efficiency.
EBIT: EBIT grew from ₹2,356.46 crore in Q1 FY25 to ₹2,503.28 crore in Q2 FY25, a 6.2% increase, showcasing stronger profitability.
PAT: Profit After Tax (PAT) increased from ₹2,041.60 crore in Q1 FY25 to ₹2,037.45 crore in Q2 FY25, highlighting the company’s ability to translate top-line growth into bottom-line performance.
These positive trends across revenue, EBITDA, EBIT, and PAT demonstrate Kpit’s financial resilience and its capacity to deliver value to its stakeholders.
Conclusion
In conclusion, the analysis of KPIT Tech Limited suggests that the company is well-positioned in the technology and automotive sectors. Its diversified revenue streams, focus on emerging technologies like electrification, autonomous driving, and connected solutions, as well as its global footprint, highlight its capabilities as a leading independent software development and integration partner.
Moving forward, KPIT’s emphasis on strategic client partnerships, technology innovations, and expansion into Asia are promising strategies that could further strengthen its market position and drive sustained growth. Overall, the company’s robust fundamentals and forward-looking approach make it an attractive proposition for investors in the technology and automotive ecosystem.
Written By: Dipangshu Kundu
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