KPIT Tech shares down 20% in 2025; target price, management views & more

JM Financial has retained its 'Buy' rating for KPIT Tech, setting a target price of Rs 1,530 following their recent conference, which featured Ravi Pandit, Chairman, and Sunil Phansalkar, Head of Investor Relations. The report highlighted key takeaways regarding KPIT's growth strategy and market outlook.

Management at KPIT expressed that recent tariff deals with regions such as the EU, Korea, and Japan have improved clarity to some extent. On the other hand, uncertainty persists concerning Mexico and Canada, which are crucial from an OEM supply chain perspective. Despite these challenges, KPIT maintains that the second half of the year should be stronger than the first half, although quarterly fluctuations are expected. "In fact, it alluded to seasonal softness in Q3, hence expects pick-up from Q4," said JM Financial said.

JM said the current slowdown is largely due to deferrals with few cancellations or broad-based pricing pressures.

"Beyond near-term challenges, the management reiterated that secular demand trends are intact, supported by the industry's transformation and focus on powertrain upgrades, cost takeout initiatives, and new revenue streams," JM said. The stock has fallen 20 per cent in 2025 so far. It fell 4.8 per cent in the past one month.

KPIT's management highlighted that outsourcing is gaining momentum, particularly amongst German OEMs shifting to lower-cost countries, though this process is slow due to local employment concerns. Confidence remains high regarding securing at least one of two large deals. Significant growth opportunities lie in commercial vehicles, off-highway sectors, and expansions in China and India. "They expect their growth to be decoupled from growth in auto volumes as value added to clients remains high," JM added.

Regarding profitability, management strategies include "pyramid optimisation, AI-led productivity and increasing share of fixed price projects (FPP)." The rising adoption of FPPs, along with AI integration, is expected to enhance margins. The management sees headroom for margin to expand on the back of FPPs and adoption of AI in delivery..

KPIT noted the fragmented nature of the Chinese market, with 170 OEMs potentially consolidating to a smaller number. "They believe that while Chinese players are strong in cockpit design, they lack in electronic architecture and SDV," JM observed. This gap presents an opportunity for KPIT to partner with Chinese OEMs, aiding in their global expansion.

With strategic expansions planned in China, KPIT anticipates significant revenue growth in both the Indian and Chinese markets, while maintaining profitability discipline. "KPIT expects India and China revenue to grow materially going forward," JM Financial stated.

This includes collaborating with JSW and a Chinese OEM to create an Indian product for the local market, with KPIT as a key tech partner.

Additionally, KPIT expects Caresoft to add synergies in commercial vehicles, off-highway, and cost takeout initiatives, having started collaborative efforts. The revision in deal terms signifies weaker demand and lower sector valuations, yet KPIT remains optimistic about future growth prospects, JM said.