KPIT Technologies: Stock Returned 190% in 3 years!

Company Overview:

KPIT Technologies is a global partner to the automotive and mobility ecosystem for making software-defined vehicles a reality. It is a leading independent software development and integration partner helping mobility leapfrog towards a clean, smart, and safe future. With a strong team of over 10,000 passionate professionals worldwide, known as “Automobelievers,” KPIT specializes in embedded software, artificial intelligence (AI), and digital solutions. Their expertise allows them to assist clients in implementing next-generation technologies seamlessly, aligning with the future roadmap of mobility. With engineering centers in Europe, the USA, Japan, China, Thailand, and India, KPIT works with leaders in automotive and mobility and is present where the ecosystem is transforming.

In Jan-2018, KPIT announced a restructuring to merge with Birlasoft and then demerge to focus only on the Mobility and the Automotive sector. On March 13, 2019, the name of the company changed from “KPIT Engineering Limited” to “KPIT Technologies Limited” (KPIT Tech).

Stock Performance:

KPIT Technologies witnessed a significant surge on Thursday, with its shares jumping over 4% from its previous day’s close. The stock concluded the trading session on BSE at Rs 1021.55. Its 52-week high and low are Rs 1029 and Rs 440, respectively. The market cap of KPIT tech is Rs 27907.84 crore. This notable increase marks the first time the stock has traded at or above the four-digit level, surpassing 1000. It has rallied by approximately 11% so far, with a few days remaining in the month. Over the last three, it has delivered a magnificent CAGR return of 186% and in one year 115%.

Quarterly Performance

KPIT tech revenue grew by 56% YOY from Rs 652 crore to Rs 1017 crore in Q4FY23. On a sequential basis it is up by 10.9% from Rs 917 crore to Rs 1017 crore. The company is successfully managing their operating margins between 18% to 19% during the last 6 to 7 quarters. The company registered a PAT of Rs 112 crore in Q4FY23 with a margin of 11%. KPIT tech ROE and ROCE stand at 25.9% and 30.6% respectively. Promoter holding has decreased over the last quarter by 0.62%.

Peer Comparison:

Why does KPIT Tech stand out?

Investment in cutting-edge technology is being prioritized by the automotive industry, and KPIT is leading the charge, thanks to its strong domain expertise. Despite dismal global macroeconomic conditions, OEM engineering spending increased by 10%, particularly in the CASE (Connected Autonomous Shared and Electric) sector, where it increased by 20%. BSE S&P Auto Index is also trading near to lifetime high showing strength. The company is proving steady revenue and EBITDA growth from the last 11 quarter with a strong guidance for FY24 to deliver revenue growth of 27% to 30% with EBITDA margins between 19%-20%. Trend of Electric vehicle is also growing with time as consumers have also started accepting the reality of electric and smart vehicles. Recently Honda did a strategic partnership with KPIT tech for Honda’s Software-Defined Mobility (SDM) program. KPIT and ZF also joined hand to create and independent company QORIX to focus on creating of automotive middleware stack. Considering these facts KPIT tech has an astounding future. Investors must keep this company in its watch list.