It’s Friday and the bulls are in a party mode. Equity benchmark Sensex jumped over 450 points to touch a record intra-day high of 55,362.89, and the broader NSE Nifty 50 index hit 16,507.35 mark as an all-time high.
Amid the ongoing market rally, shares of KPIT Technologies Limited have delivered more than 300 per cent return in the last one year. In comparison, the Nifty 50 index gained over 46 per cent and the S&P BSE Sensex rose over 44 per cent.
The multibagger stock has surged from Rs 78.4 to Rs 332.7 in the last 12 months – yielding around 326 per cent in this period. It has gained 59 per cent in the last three months. The stock has more than doubled investors’ money so far in 2021 as it has risen 133 per cent since the beginning of this year.
The midcap stock rose 6 per cent to hit an all-time high of Rs 332.7 on Friday. With a market capitalisation of Rs 9,061.82 crore, the IT share stands higher than 5 day, 10 day, 20 day, 50 day, 100 day, and 200-day moving averages.
“Considering its better-than-expected execution due to industry tailwinds, we assign a target multiple of 30x FY23e EPS (from 24x FY23e earlier), with a target of Rs 340. The target multiple has to be seen in the context of a higher Depreciation and Amortization (D&A) expense cycle that the company is now going through,” said Anand Rathi.
“The key variable to track KPIT’s performance is margin expansion as it benefits from greater offshore and higher utilisation. We expect the FY23 EBITDA margin (17.5%) to surpass levels in FY20 (13.8%), in FY21 (15.2%) and in FY22 (16.8%),” the research firm noted.
According to MarketsMojo, the company has declared positive results for the last 2 consecutive quarters and has a strong ability to service debt as the company has a low Debt to EBITDA ratio of -0.50 times. Also, the technical trend has improved from Mildly Bullish on August 5, 2021, and the stock is technically in a Bullish range now.
Multiple factors for the stock are bullish like MACD, Bollinger Band, DOW and OBV. The company has high institutional holdings at 33.97%. However, it noted that the valuation seems to be very expensive right now.
The company reported a net profit of Rs 60.25 crore for the quarter ended June 2021 compared to a profit of Rs 24 crore in the year-ago period. Revenue from operations grew 14.5 per cent to Rs 567.38 crore in the June-ended quarter against Rs 495.55 crore a year ago.
The earnings per share (EPS) has increased to Rs 2.24 in June 2021 from Rs 0.89 in June 2020.
“FY22 will see steeper wage hikes, fresher additions, higher operating costs & market-facing investments. Offshoring, productivity improvement, employee pyramid and fixed cost leverage will help us neutralize & better cost increases. We expect FY22 EBITDA to be in the 16.5% – 17.0% range,” the company said in its investor presentation.