KPIT Technologies shares fall 12% in two sessions; here is why

KPIT Technologies' shares slipped as much as 6 per cent in Wednesday's trade to touch the day's low of Rs 1,415 apiece. The stock experienced selling pressure for the second consecutive day and has lost around 12 per cent. 

At around 1:12 p.m., shares of KPIT Technologies traded 4.08 per cent or Rs 61.4, lower on the BSE at Rs 1,445 apiece. The market capitalisation stood at Rs 39,613.78 crore at around the same time.

Why is KPIT Technologies stock experiencing a freefall?

Zee Business Research has mentioned various reasons for the decline:

1. Kotal Institutional Equities has recommended selling shares.

The brokerage has given a sell call on KPIT Technologies for a target price of Rs 940 apiece, citing unrealistic growth estimates included in the share valuation.

Further, the brokerage has said that the company insources from the top 25 clients, which is a big risk.

2. Competition concerns from Tata Technologies

Tata Technologies is an information technology (IT) company focused on the automotive industry. KPIT Technologies is expected to have Tata Technology as a strong competitor.

As per Zee Business Research, Tata Technologies has the upper hand as its valuations are cheaper than those of KPIT Technologies.

Share of the company's total income from auto vertical in 6MFY24

KPIT Technologies' 96 per cent of its total income in 6MFY24 came from auto vertical.

Meanwhile, Tata Technologies' 88 per cent of its total income in 6MFY24 came from the auto vertical.

KPIT Technologies share price: Past performance

In 2023 so far, shares of KPIT Technologies have given multi-bagger returns of over 108 per cent against the Nifty50's rise of over 8 per cent. 

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