KPIT Technologies shares climb up to 7% today; what is driving gains?

KPIT Technologies shares climbed over 7 per cent in Wednesday’s (January 31) trade after the company reported an over 50 per cent increase in net profit on year for the December quarter at Rs 156.7 crore. 

At the day’s high, shares of the Pune-based company scaled to Rs 1,560 apiece on the BSE.

At around 12:28 pm, shares of the IT consulting firm traded with gains of 5.15 per cent at Rs 1,531 apiece on the BSE.

The company reported a healthy increase in profit given the surge in topline as well as the widening of profit margins. The automotive-sector-focused company reported a PAT of Rs 104.05 crore in Q3 FY23 and Rs 141.4 crore in the preceding September quarter, the company said in a regulatory filing.

The operating profit margin widened to 20.6 per cent from the year-ago period's 18.5 per cent, which helped in the growth of the overall profits, said the PTI report.

Co-founder, chief executive, and managing director Kishor Patil said the company is on target to achieve the guidance of revenues growing at 37 per cent in the fiscal year on a constant currency basis and will do better than the 20 per cent operating profit growth guidance.

What do brokerages suggest for KPIT Tech after its stellar Q3 results?

HSBC retained its ‘buy’ rating on the counter with a target of Rs 1,930, implying a substantial upside of over 32 per cent from the last close. For the brokerage, the company posted another robust quarter, with revenues increasing 4.3 per cent sequentially in constant currency terms with stable margins.

Furthermore, KPIT’s structural growth is further supported by increased pressure on European OEMs from Chinese EV players. Growth at the company justifies the valuation premium, it added.

Another global brokerage, Goldman Sachs, also retained its ‘buy’ call and raised the target to Rs 1,850 from Rs 1,760 earlier. JP Morgan maintained its ‘underweight’ rating with a lower target of Rs 1,150.