Synopsis:
KPIT Technologies is in focus as Motilal Oswal expects a 33 percent upside in this stock, citing strong hold on its existing segment, and value unlocking from its recent acquisition.
The shares of this leading IT stock are in focus after certain upticks announced by the brokerage on its latest research report. In this article, we will try to understand the rationale behind this upside.
With a market capitalization of Rs 33,122 crore, the shares of KPIT Technologies Ltd are currently trading at Rs 1,208 per share, representing a decline of 37 percent from its 52-week high of Rs 1,919.95 per share. Over the past five years, the stock has delivered a multibagger return of 1,264 percent.
Analyst Comments
Leading brokerage house, Motilal Oswal, has assigned a Buy call on the stock with a target price of Rs 1,600 per share, signalling an upside potential of 33 percent from its previous day’s closing price of Rs 1,203 per share.
The brokerage cited that KPIT Technologies is a dedicated automotive engineering R&D (ER&D) firm that’s all about helping leading original equipment manufacturers (OEMs) embrace the future of software-defined vehicles (SDVs).
Their expertise shines in areas like embedded software development, electrical/electronic (E/E) architecture, and middleware consulting, which together account for over 80 percent of their revenue.
With strategic partnerships established with more than 25 global OEMs and tier-1 suppliers, KPIT is in a prime position to thrive amid the increasing software complexity found in today’s vehicles.
Looking ahead, EBIT margins are set to rise from 17.1 percent in FY25 to 19 percent by FY28, mainly because of operating leverage and synergies from recent acquisitions. Notably, the acquisition of Caresoft is expected to add about 5 percent to revenue, further bolstering KPIT’s growth potential and profitability.
Also Read: Smallcap stock in focus after promoter increases stake in the company
Financial Highlights
The company’s revenue for Q1 FY26 was Rs 1,539 crore, representing a 13 percent increase from Rs 1,365 crore in the same quarter last year. Additionally, on a sequential basis, revenue grew by 0.72 percent from Rs 1,528 crore in Q4 FY25.
Regarding its profitability, the company reported a 16 percent net profit decline to Rs 172 crore in Q1 FY26, compared to Rs 204 crore in Q1 FY25. Additionally, on a QoQ basis, it declined by 30 percent from Rs 245 crore.
The stock delivered an ROE and ROCE of 33.20 percent and 40.88 percent respectively, and is currently trading at a high P/E of 41.62x as compared to its industry average of 30.20x.
KPIT Technologies Limited is a worldwide leader in automotive software and digital solutions, catering to clients from the Americas to Europe, the UK, and beyond. The company has its sights set on the future, focusing on cutting-edge areas like autonomous driving, ADAS, vehicle electrification, and software-defined vehicle solutions.
They provide a range of offerings, including embedded software, AI-powered perception technologies, cloud integration, and innovative battery and charging platforms, along with vehicle operating systems. Additionally, KPIT excels in virtual engineering, diagnostics, and validation services, solidifying its position as a key player in the next generation of mobility technologies.
Written by Satyajeet Mukherjee
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