Reduce KPIT Technologies; target of Rs 520: Prabhudas Lilladher

Moneycontrol • 3 days ago

Original source

Key Investment Pillars

  • KPIT delivered a surprising Q2FY27 performance ahead of estimates, with revenue growing 0.5% QoQ CC and EBIT margin at 12.7%, driven by strong traction in Trucks & Off highway and product business.
  • Deal wins were relatively weak with TCV of US$ 213mn, down 17.1% QoQ & 8.2% YoY, amid elongated customer decision-making and cost pressure on European OEMs.
  • Management expects H2FY27 to be better than H1, with sequential margin improvement, and aims to return to the 20-21% EBITDA margin range by FY28E.
  • The company is focusing on AI-led transformation capabilities to improve efficiency and deliver value despite lower client spending.

Thesis Validation Checklist

  • Watch for H2FY27 revenue growth and sequential margin improvement, as well as the company's ability to drive Off-highways and Trucks growth.
  • Monitor the conversion of deal wins into revenue and the impact of cost pressure on European OEMs.
  • Track the company's progress in expanding its Vietnam footprint and delivering global programs outside China.
  • Observe the growth of the company's AI products portfolio and its ability to leverage AI-led transformation capabilities to improve efficiency and deliver value.