KPIT Technologies to benefit from boom in auto SDV spending, Ambit initiates coverage By Investing.com

On Saturday, Ambit Capital initiated coverage on KPIT Technologies (KPITTECH:IN), a company specializing in technology solutions for the automotive sector. Ambit issued a Buy rating with a target price of INR 1,925.00. The firm highlighted KPIT’s strong performance in digital engineering and software integration, which has resulted in a compound annual growth rate (CAGR) of 18% during the period FY2020-2024. Additionally, KPIT’s earnings before interest and tax (EBIT) margins have improved by 750 basis points to 16.2%.

The report highlights the growing importance of software-defined vehicles (SDVs) in the strategies of automotive manufacturers (OEMs). Spending on SDVs is expected to double by fiscal 2030. KPIT’s positioning in the market should enable the company to capitalize on this trend, especially as research and development spending in the automotive industry becomes more focused. The analysts also point to the opportunity presented by the shift in insourcing from Tier 1 suppliers to OEMs, which could provide an additional growth boost for KPIT.

Ambit Capital forecasts KPIT’s revenue growth of 18.7% during the fiscal year 2024-2027, the highest among its engineering research and development (ER&D) peers. The forecast includes margin improvement of 130 basis points over the same period, taking into account factors such as pyramid optimization and employee stock option plan (ESOP) costs and R&D investments.

Ambit Capital’s target price of INR 1,925 is based on a long-term revenue CAGR of 13.8% from fiscal year 2024 to 2041, with an expected EBIT margin of 19.0% at the end of the forecast period. This target reflects the firm’s confidence in KPIT’s growth trajectory and its ability to capitalize on the evolving automotive technology landscape.

This translation was generated using artificial intelligence. For more information, please see our Terms of Use.