At a glance:
KPIT has quietly become the brain of global auto giants, building the software that powers autonomous driving, EV intelligence, and connected car ecosystems. With a 44% net profit CAGR, a ROCE of 41%, and a P/E of 44x, this is no IT outsourcing sweatshop. It’s Mobility as a Software (MaaS).
🏢 About the Company
- Incorporated: Originally part of KPIT Cummins, demerged and listed in its current avatar in 2019
- Focus: Embedded software, AI, AUTOSAR, EV systems, vehicle cybersecurity, and ADAS
- Clients: Top 20 global OEMs + Tier 1s (confidential, but think BMW, Renault, Honda)
- Talent: 13,000+ “Automobelievers” across India, Europe, US, Japan, China, Thailand
- Recent Update: Participating in Goldman Sachs’ London Symposium = global money sniffing around
👥 Key Managerial and Shareholding Snapshot
| Category | FY22 | FY25 |
|---|---|---|
| Promoter Holding | 40.1% | 39.47% (stable) |
| FIIs | 15.99% | 17.17% (peaked at 26.5% in 2023) |
| DIIs | 10.74% | 21.29% ✅ doubling |
| Public Holding | 31.69% | 21.15% ⬇️ retail is being replaced |
| ROE (FY25) | 33.2% | – |
| ROCE (FY25) | 40.9% | – |
Note: FIIs sold in the past year, but DIIs filled the gap like true believers.
📊 5-Year Financial Performance
| Year | Revenue (₹ Cr) | Net Profit (₹ Cr) | OPM (%) | ROCE (%) | EPS (₹) |
|---|---|---|---|---|---|
| FY21 | 2,036 | 147 | 15% | 14% | 5.33 |
| FY22 | 2,432 | 276 | 19% | 25% | 10.00 |
| FY23 | 3,365 | 387 | 19% | 30% | 13.90 |
| FY24 | 4,872 | 599 | 20% | 38% | 21.69 |
| FY25 | 5,842 | 840 | 21% | 40.9% | 30.63 |
5Y CAGR:
- Revenue: 22%
- Net Profit: 40.4%
- Stock Price: 86%
- ROCE: 🚀 Rocket Fuel
🔮 Forward Fair Value (FV) Estimate
- FY25 EPS = ₹30.63
- CMP = ₹1,370
- PE = 44.7x
Let’s say KPIT maintains 30–35% profit growth and commands Persistent Systems-like P/E (~60x if rerated):
🎯 Fair Value Estimate (12–18 months): ₹1,650 – ₹1,850
(Assuming no US recession panic or EV capex slowdown)
🚗 What’s Driving KPIT?
1. Software-Defined Vehicle Revolution
- Old cars had mechanics. New cars have code.
- KPIT writes the brain (ADAS), heart (Battery Mgmt), and soul (AI) for smart vehicles.
2. Strategic Acquisitions
- Expanded R&D centres in Germany, US, and Japan
- Acquired tech teams and platforms in niche automotive segments
3. Margin Expansion
- OPM up from 15% (FY21) → 21% (FY25)
- IP-led billing + better utilization = tech company style margins, not legacy IT BPO
4. Customer Stickiness
- 80–90% revenue from repeat clients
- Deep co-development relationships with auto giants = moats, not just contracts
🧾 Balance Sheet Highlights (FY21–FY25)
| Metric | FY21 | FY25 |
|---|---|---|
| Equity Capital | ₹269 Cr | ₹272 Cr |
| Reserves | ₹938 Cr | ₹2,640 Cr |
| Total Debt | ₹230 Cr | ₹345 Cr |
| Fixed Assets | ₹577 Cr | ₹1,972 Cr |
| Net Cash Flow | ₹10 Cr → ₹417 Cr |
They generate over ₹1,000 Cr/year from operations — and reinvest it smartly. This is not a VC-fueled startup burn story.
📉 Risks & Red Flags 🚨
| 🚨 Red Flag | What’s the Deal? |
|---|---|
| FIIs Reduced Stake | From 26.5% to 17.1% in 2 years = nervous money? |
| High Valuation | PE at 44.7x = priced for perfection |
| EV Cycle Slowdown | OEMs may cut tech spend in downturn |
| IP Revenue Dependency | Failure in 1–2 key client platforms can sting |
| Limited Diversification | 100% auto-tech exposure = no safety net |
🧠 EduInvesting Take
KPIT is not Infosys 2.0 — it’s the Nvidia of cars, minus the GPUs. They’re betting that the future of vehicles is software-first. With rising EV adoption, connected mobility, and autonomous features, KPIT is playing the decade-long endgame.
But the valuation expects nothing short of perfection. If margins hold and global clients don’t cut R&D budgets — this will earn its premium. Else, it may go from tech darling to tech sob story, like Wipro in the metaverse.
🏁 TL;DR Recap
| Metric | Value |
|---|---|
| CMP | ₹1,370 |
| FY25 Revenue | ₹5,842 Cr |
| FY25 Net Profit | ₹840 Cr |
| EPS | ₹30.63 |
| PE Ratio | 44.7x |
| Fair Value Estimate | ₹1,650 – ₹1,850 |
| ROCE | 40.9% |
| Clients | Global Auto OEMs & Tier 1s |
| Retail Shareholders | 6.15 lakh |
| FII Holding | Down from 26% to 17% |
| DII Holding | Up to 21.29% |
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Author: Prashant Marathe
Date: June 11, 2025
