Geojit Has ‘BUY’ Rating On This Multibagger IT Stock That Has Rallied 270.67% In 1-Year

KPIT Technologies Ltd is a small-cap IT firm with a market capitalization of Rs 16,118.29 crore. The stock has risen from Rs 157.20 on March 17, 2021 to Rs 582.70 on March 17, 2022 at 3:21 pm IST on the NSE, representing a multibagger return of 270.67 percent in one year. On a year-to-date (YTD) basis, the stock is down by -4.18 percent, but it has risen 85.40 percent in the previous six months. Geojit, a brokerage company, has issued a buy call on the stock, with a one-year target price of Rs. 680.

Investment rationale

As per the brokerage "The company is a digital transformation consulting and software integration company. Provide cutting edge engineering solution to more than 150 companies & enterprises in the field of CASE Mobility. Unlike peers, KPIT technology works in the high entry barrier segment which includes ADAS, Level 3-5 autonomous driving & connectivity, EV powertrain & infotainment and others."

Geojit has highlighted that "The company works with top 10 out of 15 OEMs globally. It derives most of it's revenue from Top 25 (T25) customers, which roughly accounts for about USD10 billion in R&D spend. The revenue largely derive from Software Integration. However, Scalability in the industry is huge and currently electronics account of 30% and poised to reach 50% by 2030. We expect the revenue and PAT to grow by 19%/22% CAGR over FY22E-24E owing to superior product mix and robust order book."

Buy for a target price of Rs. 680

The brokerage has claimed "The company is well placed to take the advantage of mobility and the disruptive sector (Telecom and Semiconductor). It's software integration capability with top global automobile manufacturer's will provide significant value creation compared to its peers. KPIT's further expansion in the field of middleware (Complex Body electronics) & new architectural solutions and cloud base connected service through organic & inorganic route will bring long term revenue visibility. In 1 yr. the stock is trading at 45x which is largely inline with it's peers. We value KPIT at 45x FY24E EPS and arrive at a target price of Rs.680 and recommend Buy rating."

Disclaimer

The stock has been picked from the brokerage report of Geojit. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.