KPIT Technologies Rockets: 265% Returns in 2 Years, 2900% in 4! Is the Boom Just Beginning?

KPIT Technologies (KPIT), a leading global engineering, research, and development (ER&D) services company, has seen its stock price soar, greatly benefiting shareholders.

In the past two years, the stock has risen from ₹517 to ₹1,882, giving a huge 265% gain. Over the last four years, the stock has delivered an incredible return of nearly 2900%. On Friday, the stock hit a new high of ₹1,928, getting close to ₹2,000.

Domestic brokerage firm Axis Securities believes the stock will soon cross ₹2,000. They have upgraded their rating to ‘buy’ and set a new target price of ₹2,100, citing the company’s strong growth prospects.

Era of Software-Defined Vehicles

Automakers are looking to make significant revenue from software-enabled services. The rise of electric vehicles (EVs) and autonomous vehicles offers new earning opportunities for original equipment manufacturers (OEMs).

The global automotive industry is expected to see a major increase in EV adoption and the use of CASE (Connected, Autonomous, Shared, and Electric) technologies. The demand for non-internal combustion engine (ICE) vehicles is expected to grow.

The global market for automotive software and electrical/electronic components (E/E) is predicted to reach USD 462 billion by 2030, growing at 5.5% annually.

The automotive sensor market is also set to double from 2019 to 2030, driven by the demand for advanced driver-assistance systems (ADAS) and autonomous driving (AD) sensors like LiDAR, cameras, and radars.

This growth shows the increasing importance of software and electronics in vehicles, with electronic control units (ECUs), software development, power electronics, and sensors being key areas. OEMs are adding more software content and features to their vehicles.

Sweet Spot for KPIT

Axis Securities highlights that technological upgrades in the automotive industry are creating many growth opportunities for KPIT. The introduction of semiconductors, software-based driver assistance systems, and CASE technologies is creating great potential for software partners in these areas.

The company has a strong focus on the automotive industry and is working with over 12 of the top 20 global automotive OEMs. They provide software and technology services in connected vehicles, autonomous driving, shared mobility, vehicle diagnostics, and electrification.

The brokerage emphasizes KPIT’s strategy of focusing on key strategic OEMs and Tier-1 suppliers, using deep relationships to drive growth. As top-tier companies continue to concentrate ER&D spending, this strategy is seen as the best way to grow.

KPIT uses the Global Account Management (GAM) framework to select its top customers, evaluating their importance in the mobility ecosystem, relationship quality, strategic fit, and engagement level.

In a rapidly changing environment, KPIT believes it’s crucial to collaborate with clients who will remain relevant. Their client evaluation framework is key to their future success.

Market Insights

The UK market is seeing more cost optimisation deals with quicker decision-making. The demand for ER&D services and KPIT’s strong execution capabilities are helping the company grow rapidly. The management is confident about maintaining this growth momentum over the long term, supported by a strong deal pipeline.