KPIT stocks witnessed a whipping 1200% surge in three years – here are the key takes

KPIT stocks witnessed a 1200% surge in three years. KPIT collaborates with automotive and mobility industries to make software-driven cars a reality.

KPIT campus Europe

Photo credit: KPIT

In Friday’s intraday exchange, KPIT Technologies’ shares increased 7% to Rs 874.95 on the BSE despite high volumes and an otherwise volatile market. On February 17th 2023, the stock of the information technology (IT) firm reached a new peak of Rs 876. In the last three years, KPIT Technologies’ stock price has increased by 13 times, or 1,248%, compared to the S&P BSE Sensex’s 89.0% growth.

The stock was trading 6% higher at Rs 867.60 at 12.12pm on Friday, compared to the benchmark index’s 0.6% drop. Until the filing of this story, 5.07m equity shares had traded hands on the NSE and BSE, nearly doubling the counter’s prior trading turnover.

In order to make software-defined cars a reality, KPTI Technologies collaborates with the automotive and mobility industry on a worldwide scale. It is a top autonomous software development and integration collaborator assisting in the leapfrogging of mobility towards a clean, smart, and secure future.

On March 15, KPIT Technologies revealed its collaboration with Honda to achieve Honda’s Software-Defined Mobility Journey (SDM).

Honda will continue to offer a variety of services and increased value to customers around the world in the future, according to a statement from KPIT Technologies. This is thanks to Honda’s next-generation software architecture and control-safety technology as well as KPIT’s deep domain and software expertise in the areas of autonomous driving, vehicle electrification, in-vehicle infotainment systems, and platform software.

The collaboration will eventually grow to include more than 2,000 software and vehicle system professionals from KPIT around the world, according to Kishor Patil, president of KPIT Technologies, in order to fuel Honda’s SDM plan through 2030 and beyond.

KPIT’s sales increased by 47.4% year-over-year (YoY) during the October through December quarter (Q3 FY23), thanks in part to organic growth of 24% YoY (4.9% QoQ) due to technology purchase, a healthy order book in software design vehicle (SDV), and favourable exchange rate effects.

However, the rise in wage increases following the purchase and integration costs had a 22bps negative effect on the earnings before interest, taxes, depreciation, and amortisation (Ebitda) margin. However, working efficiency and a better product mix mitigated further declines.

The company’s top concern is the expansion of mobility and autonomous spaces. KPIT was successful in getting a big contract extension from Renault worth $100m. The quarter’s total contract value (TCV) is $272m.

Innovative technology is where most of KPIT’s income comes from, and the business is highly scalable. According to an analyst at Geojit Financial Services, automotive makers are prioritising investment in new-era technologies, and KPIT is at the vanguard of these.

Despite the industry’s increased spending restraint, KPIT has not observed any contract rollover from its most important customers in the near future. The brokerage firm valued KPIT at 40xFY25E EPS with a goal price of Rs 923 per share, saying that the business is in a good position to benefit from its SDV initiative through both internal and inorganic means.

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