homebusiness Newscompanies NewsKPIT Tech maintains revenue, margin guidance but warns of slowdown in IT spends
KPIT Tech maintains revenue, margin guidance but warns of slowdown in IT spends
Goldman Sachs has maintained its buy rating on KPIT Tech with a price target of Rs 930.
KPIT Technologies has maintained its revenue growth guidance for the current financial year between 31-32 percent and also its margin guidance between 18-19 percent.
In an interaction with CNBC-TV18, MD & CEO Kishor Patil said that when it comes to competition, KPIT is able to maintain a certain degree of pricing premium. "Clients understand that many of these projects are quite complex, require a different mix of people and hence are ready to provide higher pricing on key technologies and projects," he said.
He mentioned that this trend is not subject to an particular client but across the client base. However, across the industry, Patil is observing pricing pressure and that companies are cautious on which project they wish to spend on in order to remain competitive in the future. He is seeing better allocation to new programs and technologies.
While Patil expects overall IT spends to come under pressure, he sees no such pressure within the automotive sector, particularly in the Software Defined Vehicles (SDV) space.
Goldman Sachs has maintained its buy rating on the stock with a price target of Rs 930.
The brokerage attributed the recent $100 million Renault SDV contract win at a premium pricing to its broad range of capabilities.
The ability to win entire vehicle platform projects compared with single programs earlier hints at the company’s ability in supporting deeper client relationships and criticality, said Goldman Sachs.
It said that a $100 million annual revenue run rate per customer looks possible for KPIT Technologies in the foreseeable future. Currently, KPIT Tech is estimated to post revenue of $430 million from 60 customers in 2022-23.
Goldman Sachs also highlighted that KPIT Tech may benefit from the fact that OEMs (original equipment manufacturers) at present are prioritizing EV (electric vehicle) and autonomous vehicle research and development (R&D) to reduce risk of carbon emission violation penalties.
Consequently, a longer duration of demand visibility compared with general IT services points to a sustainable period of high organic growth for KPIT Technologies, according to Goldman Sachs.
The brokerage house also pointed out that the company’s lateral hiring efforts are focused on senior architect level, which is a positive sign and should augur well for the stock.
Shares of KPIT Technologies are trading 5.6 percent lower at Rs 670.75.
Check out our in-depth Market Coverage, Business News & get real-time Stock Market Updates on CNBC-TV18. Also, Watch our channels CNBC-TV18, CNBC Awaaz and CNBC Bajar Live on-the-go!
Jharkhand Lok Sabha elections 2024: All about INDIA bloc candidates
May 14, 2024 2:52 PM
SAD's Harsimrat Kaur declares assets worth ₹135 crore
May 14, 2024 1:18 PM
PM Modi files nomination for 3rd term from Varanasi Lok Sabha seat
May 14, 2024 10:15 AM