Shares of KPIT Technologies gained over a percent, reaching Rs 1,694 in early trade on October 3, as JPMorgan upgraded its rating on the stock from 'neutral' to 'overweight'. The brokerage firm set a price target of Rs 2,000, projecting a 20% upside from the previous close of Rs 1,672 on the NSE.
This marks the second consecutive trading session of gains for KPIT, providing much-needed momentum after a challenging month in the market.
JPMorgan’s outlook and KPIT’s performance
Despite a nearly 10% dip in its stock over the past month, largely due to concerns surrounding electric vehicles (EVs) and delayed targets by global automakers, KPIT Technologies has shown resilience.
Key clients such as BMW, Honda, and Renault have remained committed to their EV goals. BMW is aiming for 50% EV sales by 2030, while Honda targets 40%, giving KPIT a stable client base despite broader industry challenges.
JPMorgan highlighted KPIT as a top pick in the Engineering R&D (ER&D) sector, upgrading its revenue and margin forecasts by 1-2%. This optimism has resulted in an estimated 1-4% increase in earnings per share (EPS) for the company. KPIT's strong ties to the auto industry, paired with its focus on engineering solutions, make it an attractive option for long-term investors in share market investment.
Strong financials bolster KPIT’s outlook
For the first quarter ended June 30, KPIT Technologies reported a robust 52.4% year-on-year increase in net profit, rising to Rs 204.16 crore from Rs 134.43 crore in the previous year. The company’s quarterly performance also showed a 24.3% increase in net profit compared to the previous quarter. Consolidated revenue for Q1 FY24 rose 24.3% year-on-year to Rs 1,364.63 crore, reflecting steady growth despite broader market volatility.
Adding 397 employees in the first quarter, KPIT increased its total workforce to 13,253, demonstrating its confidence in continued growth.
KPIT's growth signals strong investment potential
JPMorgan's upgrade and positive outlook for KPIT Technologies offer encouraging signs for investors looking for opportunities in the ER&D sector. With its strong financial performance, loyal client base, and focus on the EV market, KPIT is positioned for growth in the coming quarters. For those considering share market investment, KPIT Technologies could provide significant returns, especially with the projected 20% upside from current levels.
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