KPIT Technologies : A Pros and cons Analysis for a Investors

 Table of contents:

1. Introduction

2. Company Overview

3. Fundamental Analysis

   a. Profit and Loss statement

   b. Balance sheet

   c. Shareholding pattern

   d. Quarter Results

4. Pro's and Con's

> Introduction:

KPIT Technologies is a leading provider of digital transformation solutions and services for automotive Industry. its business segements are mainly Autonomous driving, connected vechicles, Vechicle Diagnostics, AI, clean and smart technology.

In this article we will perform a fundamental analysis of KPIT to assess its financial performance over last five years, including profit and loss statement, balance sheet, shareholding pattern, quarter results, prod and cons of investing in KPIT technologies.stock hits 52week high(946.65) in 31st march 2023 but fell 25% currently trading at 796.20 in 7th April 2023. we will discuss more in-detail why stock is facing sudden downfall? is it worth investing ? should we buy it ? sell it? Avg it?  

>Company Overview:

KPIT was founded in 1990, with its headquarters in pune,india. they operate in 13 countries, 25 locations major in europe, US, india, japan, korea, china, thailand.

Market cap: 21,509.25 crore   (Mid cap)

Sector: IT-Software

P/E ratio: 62.57 (P/E-price to earning ratio is a metric used to evaluate a company's current stock price relative to its earning per share-EPS. The P/E ratio is calculated by dividing the current market price of a stock by its EPS.

* share price of KPIT in 8th april 2023 is 796 and its EPS is 12.73, 796/12.73 = 62.57.

High/Low: 946.65/440.40

Face Value: 10 (expect stock split, bonus shares from the company in future)

a. Profit and Loss statement: 

In Crores,

Year        Sales        Operating profit     Net profit (after tax)

2018         0                     -0                          -0

2019       641                   92                         55

2020       2165                290                       148

2021       2036                307                       147

2022       2432                439                       276

pros : 

*From last 4 years sales growth drastically increasing.

*Net profit increased in both quarley and annually.

Con's:

*company need to perform well to maintain operating profit margin

b.Balance Sheet:

In Crores,

Year     Reserves  L/S term Borrowings    Cash

2018    -0.27            0/0                               0.10

2019     654.97     37.09 / 59.97                 48.71

2020    755.86      2.97 / 16.61                    8.22

2021    779.22      2.40 / 0                         126.16

2022    948.83      1.87 / 0.72                    100.45

Pro's:

* Company has low Debt

* increase in reservers in every year.

* company has good amount of cash and assets growing every year.

c. Shareholding Pattern:

In percentage(%).

Year     Promoter    DII      FII       Public

2020      42.35      15.45     20.74    19.99

2021      40.11      13.27     20.38    24.68

2022      40.11      12.69     20.30   25.54

Pro's:

* company has become public favourite.

*company has constant FII holdings from last three years, Despite huge selling happening from Foreign investors in indian market 

Con's:

* Slightly selling happening from promoters and Domestic investors from last three years.

d.Quarter Results:

 Quarter     Sales      Total income     Net profit(After tax)     

DEC21     305.19       305.19              47.12

MAR22   331.92        331.92            86.23

JUN22     354.79       354.79             73.68

SEP22     357.57        357.57             65.82

DEC22    379.94        379.94             66.45

Pro's:

* slight increase in sales and income from operations.

* expect to increase in sales and income from next quarter/year.

Con's:

* Due to more expenditure, net profit over last 3 quarters slightly decreased.

> Recent new orders and partnerships:

1. KPIT to accelerate Honda's transformation towards software-defined mobility:

2. Renault Group selects KPIT as a strategic technology partner for next generation software-defined vehicle(SDV) program.

> Ratings from Top Agencies:

1. Goldman Sacs - Buy Target price Rs 930

2. JP morgan - Under weight - Target price Rs 520

Pro's :

1. Expect increase in sales, profit in upcoming quarter due to Honda and Renault partnerships.

2. Low Debt, Foreign investors and public favourite stock.

3. Experienced Management.

4. Steady increase in profit and sales over the past years.

Con's:

1. Difficult to maintain operating profit margin compared to previous Quarter/yearly

2. IT company mainly focused/Depends on Automobile industry.

3. Need to expand their Business model in other industries.

4. High Valuation.

Conclusion :

KPIT is good company for longterm, focused on EV which is the growing sector in india. Auto sector is under-performed from last 3-4 years, now EV is Booming in india, KPIT will also get benefitted along with Auto industry  players.