None that I know but that’s something you will have to decide for yourself if management can fulfill or if they will slash guidance as the situation develops.
Street expectation is always been over their guidence… Compony has been under promising and over achieving. But this time commentry hinting towards real slowness. Whats yous opinion
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I am optimistic about KPIT from these levels. Already, the stock is at 50 PE. If the price remains the same for a year, the PE will become 40. That is the level where I will be super comfortable buying large chunks.
Now, coming to management guidance, we should listen to Kishore Pandit’s interview. Here, he talks about a strong pipeline in place. But due to the overall slowdown across Western markets, some of the programs are not getting initiated as expected earlier in the upcoming quarters.
What one can understand from this that this is not a permanent loss of growth for the company. Just this year, they will be behind. Also, even if it grows at 18% a year, I will be happy to buy KPIT for 45 PE for sure. Because one has to ask himself - do you see KPIT going bankrupt or reducing revenues 10 years down the line. And, for a company of KPIT’s quality, one should buy when there is blood on the market.
Hi All
I was going through the contents of the situation of European Automobile market and found that some of the plants of big companies are going to shut down in nearby and shares of these European automobile companies are already down by more than 30% (like BMW down by ~33-34%).
As per the Annual report of FY2024 of KPIT 52% of their revenue comes from the European market and if there is that much level of disturbance in the European Market Automobile industry and KPIT being having revenue concentration risk there, then it will impact the KPIT also to very large extent and it takes time to grab the new customer for the company to generate sales and profitability.
I think management is searching for new customers to maintain the sales.
Any views on the above matter.
Sharing below link found on you tube for the views on European Automobile Market.
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KPIT has been growing rapidly at 25% types, now they are lowering the guidance not saying they will not grow, market will adjust the future value accordingly, it might either lead to a fall in price or time based correction where fundamentals back fill the price. This business was growing faster than other players like LTTS / Elxsi and was valued Thus.
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Potential good news for KPIT EU customers and in-turn KPIT Technologies
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Chinees Electric car makers are the threat to overall Industry globally
China supported their EV industry over decade by spending whooping 230.86 billion, hence they are able to produce Low cost, Quite good quality EV cars, now they are setting up factories all over the world to target the market from the vicinity.
USA came up with policy of 100% tarrif on Cinees EVs, as they are facing same challenges they faced way back from Japanees car makers.
Europea automotive industry facing
Higher energy cost (Sanction on Russia)
Higher wages
But their tarrif against Chinees EVs are not harsh as USA (17-38% untill now)
Industry experts saying : Its not short time blip, not some kind of cyclical challenge, Its a longer term structural transition, longer term structural compition against more players than past it really take hard work to survive.
Probably Europe will also need to come up with steep tariffs to safe guard and balnce the concerns of Economy, Environment, Industry. Consumer demands.
KPIT definitely will be benificiery in such case
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Copied it from another group in the forum. Do we really see Chinese tech companies restricting the growth of KPIT
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Yes, management has often mentioned the risks from Chinese OEMs. The Chinese government has invested heavily in the EV industry over the past decade, building a strong ecosystem.
As a long-term investor, I’m buying more of KPIT Technologies at this level. This is based on my own risk tolerance and belief that the EU will not let its OEMs struggle too much. I think the EU will put measures in place to slow down the entry of Chinese OEMs.
If Chinese OEMs keep entering the EU at this rate, it could cause issues for other large auto companies in the future. The EU wouldn’t want to see large-scale job losses in its own markets.
The US, the world’s largest auto market, has already put a 100% tariff on Chinese EVs. So, I don’t see this situation as a major “Going Concern” issue for KPIT Technologies.
Personally, I’m okay with taking on industry risks, while company-specific risks are harder to manage.
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I don’t see any new things in the article. Funniest thing is that comparing PE of KPIT with industry PE and concluding that its at premium to industry PE, all these things are newbies points. All data is available in the investor presentation
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KPIT Technologies | Q3 Highlights
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Revenue growth 17.4% in CC and 18.1% in $, Y-o-Y Growth led by Powertrain and Connected
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$236M worth engagements closed in the quarter Interim Dividend of 2.50 per share
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Q-0-Q CC growth of 2.0% and reported $ growth of 1.7%. Growth led by Asia and Passenger Cars.
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EBITDA margins stood at 21.1% as compared to 20.8% last quarter, mainly due to productivity improvement, revenue mix and fixed cost leverage.
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The INR appreciated against Euro and Yen (60% of revenue) and depreciated against USD (~27% of revenue) resulting in lower INR revenues.
FY25 Margin Guidance Increased To 21%+ From 20 % Earlier
Maintain CC Rev Growth Outlook Of 18-22%
$ Revenue At $176 m, Up 2% QoQ & Up 18% YoY
Q3 revenue meets expectations; operating profit rises despite currency headwinds.
EBITDA margin outlook raised to 21%+ (from 20.5%+). Investing in AI for automotive, focusing on human-centric, safe, and innovative solutions. Strong client relationships drive deal closures, cash efficiency, and growth pipeline.
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KPIT Technologies | Management Interview
- Deal wins remain strong, with higher profitability in q3
- Europe and the us leading in new deal wins
- Pipeline has grown significantly
- Shift in revenue mix has boosted per-person revenue
- EV remains a key business segment, with strong growth prospects across markets
- Confident about opportunities in new technology
- Europe has been a major growth driver for years
- Expects growth in other geographies by q1fy26, if not q4fy25
- Long term, vehicle volumes may stay flat, but tech spending is set to rise significantly
- Transition from conventional to new technology aligns with company’s strengths
Watch here - https://youtu.be/B0eVQHW8Xq0
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KPIT concall link.
Interesting / lesser known things:
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Watch concall Q from Mr Bharat Shah of ASK investment. Around 1 Hour time stamps.
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Their 98% revenue comes from T25 clients. Total client is 63, remaining client only contributes 2% of revenue - mostly licensing deals.
Disc: Invested and views are biased.
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++
They have increased the guidance for EBITDA margin from 20.5% to 21% for full FY2025.
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Updates:
Qualcomm Technologies joins as strategic minority shareholder, with KPIT and ZF as
significant shareholders in QORIX.
QORIX is a strategic initiative for KPIT in the middleware space, operating as a joint venture with ZF. While currently contributing to a share of losses for KPIT, it has started generating revenue and is expected to be a more significant contributor in the future with ongoing client engagements and potential new partnerships. QORIX has secured one significant OEM as a client and is in advanced engagement with another European OEM. Discussions regarding a third partner are in an advanced stage - this was discussed in past communication.
Interesting.
Disc: Invested. Highest holding in my PF, views are biased
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Morgan Stanley on_India_IT_Services_Recalibrating_growth_and_multiples
KPIT is mentioned in page 19.
Revenue growth estimation is 16-18 cagr and eps estimation is 20.8%. Current CMP 1206, PE of 43. I believe KPIT will grow higher than estimated by MS and current PE seems attractive.
Morgan_Stanley_on_India_IT_Services_Recalibrating_growth_and_multiples.pdf (7.4 MB)
Interesting documents for comparison.
Disc: Invested since covid, added recently and views are biased since long.
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Just seen the video about BYD Zhengzhou mega factory in china will be bigger than San Francisco and 10x larger than the Tesla Gigafactory in Nevada. In next few years they are going to disrupt the industry and are going to dominate automotive, robotics, and AI.
I doubt what lies in future for KPIT which is only into automotive sector ???
Link: https://youtu.be/dmgizkX1_dg?si=_vBSpyeKGxKhvxQx
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