Axis Securities sees over 14% upside in KPIT Technologies, recommends buying

Domestic brokerage Axis Securities has given a 'buy' call on KPIT Technologies as it believes technological upgrades in the automotive industry are creating multiple growth opportunities for the company. The brokerage gave a price target of Rs 2,100 apiece which implies a 14.1 per cent upside from the previous close. 

As per the report, the introduction of semiconductors, software-based driver assistance systems, and CASE (Connected, Autonomous, Shared, and Electric) technologies has created a tremendous growth potential for software partners in these verticals such as KPIT. 

Further, in an environment of high disruptions, KPIT believes it is imperative to collaborate with clients expected to remain relevant in a changing business environment. Thus, KPIT’s client evaluation framework is crucial to its success moving forward as per Axis Securities. 

Moreover, the UK is witnessing higher cost optimisation deals with faster decision-making. Increasing demand for y Engineering, Research & Development (ER&D) services and strong execution capabilities are helping KPIT to grow with accelerated revenue growth momentum. The management is also confident about gaining momentum over the long term, backed by a robust deal pipeline.

Going forward, the company is expected to continue strong revenue growth momentum backed by robust deal wins and strong addition of capabilities. FY25 guidance is 18 per cent to 22 per cent. EBITDA Outlook retained at 20.5 per cent+. 

"We upgrade our recommendation and assign a 57x P/E multiple to its FY26E earnings of Rs 37.1/share to arrive at a TP of Rs 2,100/share, implying an upside of 13 per cent from the CMP. Hence, we recommend a BUY rating on the stock," the report read.

KPIT Technologies Ltd (KPIT) is a leading global pure-play Engineering, Research & Development (ER&D) services company. It offers design and development solutions throughout the product development value chain across all leading manufacturers and OEMs globally. Moreover, it is also involved in product development in the passenger car segment and the commercial vehicle segment.

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