Dolat Capital recommended Accumulate rating on KPIT Technologies with a target price of Rs 335 in its research report dated July 26, 2018.
KPIT reported muted Q1FY19 with a USD revenue growth of 0.2% QoQ supported by services business. EBIT margin improved 74bps QoQ to 9.4% (DCMe: 9.5%) largely on back of operational efficiencies and INR depreciation. The stock is currently trading at inexpensive valuations 13.6x/11.3x FY20/FY21 earnings estimates. We believe revenue growth above industry avg., coupled with margin improvement will lead to absolute upside in near to medium term.
Outlook
We believe revenue growth above industry avg., coupled with margin improvement will lead to absolute upside in near to medium term; upgrade the stock to ACCUMULATE (REDUCE earlier) with Sep’19 TP of ` 335 based on 14x one-year fwd. PER.
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