KPIT Technologies share price drops over 5% after a sharp rally; analysts see 42% downside on expensive valuations
KPIT Technologies share price declined over 5% in early trade on Tuesday after witnessing a stellar rally this month. The stock fell as much as 5.50% to ₹1,533.00 apiece on the BSE. KPIT Technologies shares have jumped more than 31% in one month while the stock is up over 12% year-to-date (YTD).
The shares hit a 52-week high of ₹1,639.60 apiece on November 20. Analysts believe this rally over the past month was without any commensurate fundamental catalyst and the stock now trades at expensive valuations. Also Read: Titagarh Rail Systems share price hits 52-week high on partnership with ABB for metro projects in India Kotak Institutional Equities has a ‘Sell’ rating on KPIT Technologies with a target price of ₹940 per share, implying a downside of 42% from Monday’s closing price.
“KPIT trades at a rich 59X FY2025E earnings. The stock price implies elevated growth of 20% over a period of 10 years with margin expansion to 20% on average at the EBIT level (16% current). Implied absolute revenue size works out to $2.6 bn by FY2033E," said Kotak Institutional Equities.
To put the size in context, the largest pure-play ERD player, AFRY, has a revenue base of $2.3 billion with diversified vertical presence. (Exciting news! Mint is now on WhatsApp Channels Subscribe today by clicking the link and stay updated with the latest financial insights! Click here!) “KPIT deserves premium valuations due to its strong capabilities in a high-growth vertical although we disagree with the magnitude of premium assigned. Our Fair Value of ₹940 implies multiple of 34X on FY2025E EPS," the brokerage added.
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