Buy KPIT Technologies; target of Rs 1498: Anand Rathi

Anand Rathi's research report on KPIT Technologies

We remain structurally positive on KPIT. While most auto ER&D players reported weak results, the company delivered an in-line performance amid challenging macro; however, no guidance for FY26 was given. The company is strategically diversifying its exposure from Europe (43.4%, down 830bps y/y) to APAC, i.e., primarily Japan (28.9%, up 1,030bps y/y), while increasing its share of fixed-priced contracts (59.6%, up 880bps y/y), which should aid margins ahead. QorixJV, collaboration with Chinese OEMs, marquee clientele, increasing revenue productivity driven by higher fixedpriced projects, low working capital requirements are strong moats for the company.

Outlook

Our TP of Rs 1,498 implies an upside of 21.9% from the CMP of Rs 1,229. The stock currently trades at 39x/ 31x FY26e/27e P/E. We cut our FY25-27e revenue/ EPS CAGRs to 12.4%/13.6%, respectively, vs. 15.9% / 17.7% earlier, owing to reduced near-term demand amid challenging macro.