Rs 68 to Rs 1,085: This IT stock turned into a multibagger in three years; buy, sell or hold?

Shares of KPIT Technologies Ltd have turned into a multibagger in the last three years. The IT stock, which closed at Rs 68.5 on July 17, 2020 ended at Rs 1,084.85 in the previous session, delivering 1,483% returns during the period. An amount of Rs 1 lakh invested in KPIT Technologies stock three years ago would have turned into Rs 15.83 lakh today. In comparison, Sensex has risen 81.25 per cent during the period. The stock touched an all-time high of Rs 1159.95 on June 7, 2023 and a 52 week low of Rs 500 on June 19, 2022.  

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In terms of technicals, the relative strength index (RSI) of KPIT Technologies stands at 54.9, signaling the stock is trading neither in the overbought nor in the oversold zone. The stock has a beta of 0.7 in the last one year, indicating very low volatility. KPIT Technologies shares are trading higher than the 5 day, 10 day, 20 day, 50 day, 100 day and 200 day moving averages.      

In a year, the stock has gained 114.53 per cent and risen 55.68 per cent this year. Total 0.25 lakh shares of the firm changed hands amounting to a turnover of Rs 2.70 crore on BSE.  

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Market cap of the firm stood at Rs 29,729 crore.   

Returns of Peers  

The firm has outperformed its peers when it comes to returns to shareholders during the last three years. While L&T Technology Services stock zoomed 200.67 per cent, Persistent Systems shares climbed 581.98 per cent during the period.  Shares of another IT services firm Coforge have rallied 190.46% in the last three years.   

The rally in the stock can be attributed to strong earnings of the firm.  

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Financial Performance  

KPIT Technologies reported a 7.2% rise in net profit for the quarter ended March 2023 on a quarter-on-quarter basis. On a year-on-year basis, net profit rose 38.60% to Rs 111.58 crore. On an annual basis, revenue zoomed 39% to Rs 3365 crore in FY23 against Rs 2432.38 crore in the previous fiscal. Net profit rose 40% to Rs 386.86 crore in FY23 against Rs 276.24 crore in FY22.  

The IT firm logged a consolidated net profit of Rs 104 crore in the December 2022 quarter (Q3 FY23), up 48 per cent from Rs 70.3 crore in the same quarter a year ago. The company's revenue from operations rose to Rs 917.11 crore in Q3 FY23, a year-on-year (YoY) growth of 47 per cent from Rs 622.36 crore in Q3 FY22.  

Sales climbed 47.36% to Rs 917.92 crore in the last quarter against Rs 622.37 crore in the corresponding quarter of the previous fiscal.  EBITDA rose 45.19% to Rs 166.94 crore in the December quarter against Rs 114.98 crore in the corresponding quarter of the previous fiscal.  

In the second quarter of the current fiscal, the firm, reported a profit of Rs 83.48 crore against Rs 65.10 crore in Q2 of FY22. Revenue from operations rose to Rs 744.crore in Q2 compared to Rs 590.87 crore in the corresponding period of last fiscal.  

Net profit rose 39% to Rs 381 crore in the fiscal ended March 2023 against Rs 274.23 crore in the March 2022 fiscal. Sales climbed 37.46% to Rs 3405 crore in the last fiscal against Rs 2477.15 crore in the March 2022 fiscal.  

On a yearly basis, net profit zoomed rose 87.65% to Rs 274.23 crore in the last fiscal against Rs 146.14 crore in the fiscal ended March 2021. Sales rose 19.48% to Rs 2432.39 crore in fiscal ended March 2022 against Rs 2035.74 crore for the fiscal ended March 2021.  

Here’s a look at what analysts said on the outlook of the stock. 

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Abhijeet from Tips2trades said," KPIT Technologies is bearish on the Daily charts with strong resistance at Rs 1103. A daily close below the support of Rs 1015 could lead to target of Rs 940 in the near term." 

JPMorgan is bearish on the IT sector stock with a target of Rs 540.  

Vaishali Parekh, Vice-President - Technical Research at Prabhudas Lilladher said, “The stock has been moving sideways for quite some time within the range of Rs 1105 and Rs 1035 zone and a decisive breach of either side is necessary to confirm for a fresh directional move ahead. The upside initial target would be set near Rs 1160 levels whereas Rs 1035 levels can be maintained as the support zone from current levels.”    

About KPIT Technologies   

KPIT Technologies Limited is a technology company, which is focused on automobile engineering and mobility solutions. The company offers electronic and mechanical engineering solutions to its customers. It also analyses data for diagnostics, maintenance and tracking of assets and related connectivity solutions, including data and analytics beyond embedded or mechanical engineering and their connectivity and integration with back-end information technology (IT) systems and platforms for the automobile and mobility sector. 

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