Thu Oct 24 05:38:24 UTC 2024: – KPIT Technologies Ltd’s shares dropped 10% in Thursday’s trading, raising concerns about revenue growth.
– The company has guided for FY25 revenue growth in constant currency terms at the lower end of 18-22%, implying a quarterly growth rate of only 1% for H2FY25, compared to a previous 4.7% growth rate.
– ICICI Securities re-initiated coverage on KPIT, providing a ‘Hold’ rating and a target price of Rs 1,700, valuing the stock at 49 times the one-year forward EPS.
– The stock fell to Rs 1,474.50, erasing all gains made in 2024 but remaining up 30% over the past year.
– ICICI Securities highlighted KPIT’s strengths in areas like SDV (Software-Defined Vehicle) and infotainment, but also pointed out challenges in the automotive sector, particularly impacting European OEMs.
– The company’s EBITDA margin has been maintained at 20.5%, but expectations for top-line growth have decreased due to increased offshoring and project delays.
– It is projected that KPIT may see slightly higher margins in FY25, although the third quarter might be weaker due to furloughs.
– The brokerage mentioned that a faster electrification timeline from auto companies poses a risk but a rapid increase in passenger vehicle sales could present an opportunity.

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