KPIT Technologies shares rise as JPMorgan upgrades to 'overweight'

KPIT Tech shares have been on a rough patch of late, tanking almost 10 percent in the past month.

Shares of KPIT Technologies rose over a percent to Rs 1,694 in morning trade on October 3, extending their gains for a second trading session in a row following JPMorgan's upgrade to 'overweight' from 'neutral' and a hike in target price.

With a price target of Rs 2,000, the international brokerage forecasts an upside potential of 20 percent from the last close of Rs 1,672 on the NSE. KPIT Tech shares have been on a rough patch of late, tanking almost 10 percent in the past month.

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The stock has underperformed over the last one to three months compared to peers, largely due to negative news around electric vehicles (EV) as global automakers push out EV targets. However, KPIT's key clients—BMW, Honda, and Renault—have not scaled back their EV goals, with BMW and Honda maintaining targets of 50 percent and 40 percent EV sales by 2030, respectively.

JPMorgan views KPIT as a top pick in the Engineering R&D (ER&D) sector, upgrading its revenue and margin forecasts by 1-2 percent, leading to a 1-4 percent rise in EPS estimates.

The auto industry-focussed software and engineering firm, reported a 52.4 percent year-on-year increase in net profit to Rs 204.16 crore for the first quarter ended June 30, as compared to Rs 134.43 crore reported in the previous year.

The company's net profit grew by 24.3 percent over the last quarter, while its consolidated revenue jumped by 24.3 percent over the last year and by 3.5 percent over the last quarter to Rs 1,364.63 crore in the June quarter of FY24, according to BSE filings.

KPIT added 397 employees in Q1, taking the total headcount to 13,253.

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