This Tech company shares declined 13% following JPMorgan’s target price reduction to Rs 1,900. Despite showing an 8% QoQ revenue growth to Rs 1,471 crore and 44% YoY net profit increase to Rs 204 crore in Q2 FY25, the flat QoQ profit and lowered FY25 growth guidance raised investor concerns.
Share Price Movement
The share price of KPIT Technologies Limited came down 13.3 percent to Rs. 1,417 per share on Thursday, a significant decline from its previous close of Rs. 1,634.55 per share. The market capitalization now stands at approximately Rs. 38,490 crore as of September 24, 2024.
What Happened
KPIT Technologies shares plunged 13% primarily due to JPMorgan’s downward revision of its target price to Rs 1,900. The investment bank’s decision followed KPIT’s announcement to lower its FY25 revenue growth outlook to the bottom end of its 18-22% guidance range. Furthermore, delays in deal ramp-ups and closures raised concerns about future performance. JPMorgan specifically warned about potential weakness in H2FY25 and its impact on FY26 growth. Additionally, despite an 8% quarterly revenue increase, flat net profits and declining EBITDA margins (20.5% vs 21.2%) contributed to investor concerns.
KPIT Technologie’s Q2 FY25 performance shows mixed results with moderate growth in revenue but flat profits. According to its recent filing, in the quarter ending September 2024, KPIT’s consolidated revenue from operations has increased by 8% QoQ, from Rs. 1,365 crore in Q1 FY25 to Rs. 1,471 crore in Q2 FY25.
The company’s consolidated net profit remained flat at Rs. 204 crore in Q2 FY25 compared to Q1 FY25. On a Year-on-Year basis, the net profit showed a significant growth of 44% from Rs. 141 crore in Q2 FY24.
The company’s basic EPS for Q2 FY25 is 7.51, showing minimal change from 7.53 in Q1 FY25. The EBITDA margin declined slightly to 20.5% in Q2 FY25 from 21.2% in Q1 FY25, while EBITDA increased by 4% QoQ to Rs. 301 crore from Rs. 289 crore.
The company has revised its FY25 constant currency revenue growth outlook to the lower end of its 18-22% guidance range, citing delays in deal ramp-ups and closures. Additionally, the board has approved a fundraise of Rs. 2,880 crore through QIP.
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Shareholding Pattern:
As of the September 2024 shareholding pattern, KPIT Technologies Limited has 39.47 percent held by promoter, foreign institutional investor holds 20.97 percent, and the public holds 21.11 percent.
About the Company:
KPIT Technologies Limited, established in 1990 by Ravi Pandit and Kishor Patil, is a multinational engineering research and development (ER&D) powerhouse headquartered in Pune, India. The company has evolved into a global leader in automotive software solutions, operating through strategic development centers across Europe, USA, Japan, China, Thailand, and other locations.
With a workforce of 5,000-10,000 professionals worldwide, KPIT Technologies specializes in creating cutting-edge software solutions for the automotive industry, focusing on embedded software, artificial intelligence, and digital solutions for software-defined vehicles. The company’s journey began as KPIT Infosystems, marking its public debut in 1999. A transformative merger with Cummins Infotech in 2002 led to its rebranding as KPIT Cummins Infosystems Ltd, before evolving into its current identity in 2013.
A strategic restructuring in 2018 involved a merger with Birlasoft followed by a demerger, enabling KPIT to sharpen its focus exclusively on automotive technology. This strategic move has positioned KPIT as a leading independent partner in the mobility ecosystem, specializing in software development for next-generation vehicles, embedded systems integration, and innovative mobility solutions including autonomous driving and electric vehicle technologies.
Written By Fazal Ul Vahab
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