Accumulate KPIT Technologies; target of Rs 1390: Prabhudas Lilladher

Prabhudas Lilladher's research report on KPIT Technologies

The operating performance was fairly in line with our estimates of sequential revenue decline of 3.2% CC QoQ and flat QoQ margins. The revenue growth was primarily driven by PV (+3.3% QoQ), while the CV segment (down 2.8% QoQ) saw a ramp down in one of the key accounts. The other element to the slowdown is the re-prioritization or cannibalization of revenues from futuristic product investments to fixing the existing products and features (smart Cockpit and Autonomous). Although the TCV bookings plummeted sequentially, the deal pipeline and OEMs conversations remain healthy, which drives management confidence to have better H2 over H1. Additionally, the company’s early efforts to penetrate Chinese market have started reaping benefits in terms of engaging with Tier-1 suppliers and few OEMs, where it deploys products and accelerators over core services. We believe the healthy execution along with a notable deal pipeline on the PV side should continue its momentum and support revenue growth in H2.

Outlook

We are adjusting FY26 inorganic revenue contribution due to deferment of the integration timeline of Caresoft and baking CC revenue growth of 6%/14% YoY for FY26E/FY27E, while keeping our margins unchanged. We are assigning 35x PE to FY27E, translating a TP of 1,390. Maintain “ACCUMULATE”.

For all recommendations report, click here