- Shares of KPIT Technologies Ltd fell 6% in Tuesday’s trade after a report by Kotak Institutional Equities suggested unrealistic growth expectations embedded in the stock price.
- KPIT Tech shares trade at a rich valuation of 59 times FY2025E earnings per share, implying elevated growth and margin expansion expectations over the next 10 years.
- Most OEMs are targeting the launch of new models based on new centralized vehicle architectures by 2026, which involves a shift from monolithic technology architecture to microservices architecture for ease of maintenance/upgrades.
In the latest development, KPIT Technologies’ shares witnessed a sharp decline of 6% after the leading brokerage firm Kotak Mahindra recommended a ‘sell’ rating on the stock with a target price of Rs 940.
According to Kotak’s research report, the tech company’s stock has been downgraded from ‘add’ to ‘sell’ due to concerns about its growth prospects and valuation. The report also highlighted that KPIT Technologies’ revenue growth may face headwinds in the near future, leading to a negative impact on its stock performance.
Following the recommendation, KPIT Technologies’ shares slipped by 6% in early trading on Monday, reflecting investor’s reaction to the brokerage’s report.
The news of the sell rating and lower target price comes at a time when the tech industry is already facing several challenges including supply chain disruptions and rising input costs.
Despite this setback, KPIT Technologies continues to remain optimistic about its long-term prospects, focusing on its core competencies and market expansion strategies.
As the market reacts to Kotak’s recommendation, investors are closely monitoring the developments and future outlook for KPIT Technologies.