Buy KPIT Technologies; target of Rs 58: Cholamandalam securities

Cholamandalam securities' research report on KPIT Technologies

For 4QFY20, KPIT registered 8.3% YoY growth in revenues to reach USD 76.9mn, in CC terms the growth was 11.5%. On geographic basis the revenue momentum was largely driven by a robust growth in Europe (+34% YoY) followed by a 7% YoY growth in US. However, a 22.3% YoY decline in revenues from Asia dampened the overall growth for the quarter.  On a sequential basis amongst verticals, ‘others’ segment and new mobility segment led the growth (+34.3%/144.7% QoQ respectively). Revenues from passenger vehicle segment (constituting 75% of sales) remained flat sequentially. Commercial vehicle segment saw de-growth of 4.7% QoQ and the management expects recover to be gradual here.

Outlook

The stock is trading at a P/E of 9.5X/7.5x on FY21E/FY22E EPS, respectively. We arrive at a revised price target of ₹58 based on P/E of 9.5x FY22EPS and upgrade the rating on the stock to BUY given attractive valuations.

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