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Target: ₹2,100
CMP: ₹1,869.60
KPIT Technologies, a pure-play engineering, research & development (ER&D) services company, offers design and development solutions throughout the product development value-chain across all leading manufacturers and OEMs globally. Moreover, it is also involved in product development in the passenger car segment and in the commercial vehicle segment.
Technological upgrades in the automotive industry are creating multiple growth opportunities. The introduction of semiconductors, software-based driver assistance systems, and CASE (Connected, Autonomous, Shared and Electric) technologies create tremendous growth potential for software partners in these verticals. KPIT has a strong vertical focus on the automotive industry to capitalise on the demand and transformation the industry is currently experiencing.
Strong revenue growth momentum will continue to be backed by robust deal-wins and strong addition of capabilities. FY25 guidance is 18 per cent to 22 per cent. EBITDA outlook has been retained at over 20.5 per cent.
We upgrade our recommendation and assign a 57x P/E multiple to its FY26E earnings of ₹37.1/share to arrive at a TP of ₹2,100/share, implying an upside of 13 per cent from the CMP.
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