Buy KPIT technology; target of Rs 680: Geojit

Geojit's research report on KPIT technology

The company is a digital transformation consulting and software integration company. Provide cutting edge engineering solution to more than 150 companies & enterprises in the field of CASE Mobility. Unlike peers, KPIT technology works in the high entry barrier segment which include ADAS, Level 3-5 autonomous driving & connectivity, EV powertrain & infotainment and others. The company works with top 10 out of 15 OEMs globally. It derives most of it’s revenue from Top 25 (T25) customers, which roughly accounts for about USD10 billion in R&D spend. The revenue largely derive from Software Integration. However, Scalability in the industry is huge and currently electronics account of 30% and poised to reach 50% by 2030. We expect the revenue and PAT to grow by 19%/22% CAGR over FY22E-24E owing to superior product mix and robust order book.

Outlook

Given the strong fundamentals and strategic change adopted in the company’s segment mix, we value KPIT on 45x FY24E EPS and recommend Buy rating with a target price of Rs. 680 at CMP.