Why KPIT Technologies Share Price is Falling

After falling for three consecutive weeks, benchmark indices staged a healthy recovery in the last three days led by buying across sectors.

Manufacturing activities in India touched a three-month high in March boosted by faster expansion in new orders and output amid demand resilience and easing of cost pressures, according to a monthly survey.

However, despite the positive sentiment in the market, there was one company's whose shares fell by more than 17% on Monday, 3 April 2023.

Shares of KPIT Technologies slipped 17% to Rs 760 on the BSE in Monday's intra-day trade.

Lets find out why the company's shares fell.

Profit booking

KPIT Technologies shares witnessed profit booking amid reports that a foreign brokerage had initiated coverage with an "underweight" rating on the stock.

The brokerage firm predicted a 41% downside from its Friday's closing price of Rs 925 per share.

This was based on two major catalysts - slowdown in growth and reduction in order book.As per reports, KPIT's growth is expected to fall below 20% beyond financial year 2023-24.

Second, the announcement of Tata Technologies' IPO has reduced the scarcity premium associated with KPIT's stock.

The Tata Technologies IPO, is expected to be one of the most popular in recent years.

The company will raise somewhere between Rs 35-40 billion (bn), giving it a valuation of Rs 162-200 bn.

Tata Technologies provides engineering and development services, to businesses across automotive, aerospace, industrial machinery, and other industries.

It serves customers in 27 countries across North America, Asia-Pacific, and Europe and is a competitor to KPIT.

Management guides for strong business outlook

While these reports have painted a somber picture of the company's growth prospects, the company's management has said that it is confident of beating its FY23 growth outlook.

It said that the company's engagements with strategic clients are progressively becoming more pertinent and partnership oriented.

It is committed to investments in new-age technologies, relevant to the mobility industry and is focused on ensuring successful delivery of large complex engagements.

The employee turnover has shown a declining trend over last 2 quarters and it expects this trend to stay, going forward.

How KPIT Technologies shares have performed recently

KPIT Technologies shares have fallen by over 7% in the last five days and by 2.5% in the last month.

However, so far in 2023, shares of the company are up by over 16%. The stock has also risen by over 600% in the past five years.

KPIT Technologies touched its 52-week high of Rs 946.5 on 31 March 2023 while it touched a 52-week low of Rs 440 on 26 May 2022.

About KPIT Technologies

KPIT Technologies is a digital transformation consulting & software integration company that provides cutting edge engineering solution to more than 150 companies & enterprises in the field of CASE Mobility.The company derives most of its revenue from innovative technology and the scalability of the industry is huge. Automotive manufacturers are prioritizing investment in new age technologies and KPIT is at the forefront of these.

The company was formed by a three-step complex deal between KPIT Technologies and CK Birla Group's Birlasoft.

Birlasoft (India) merged with KPIT Technologies Ltd in January 2019 and the company was renamed as Birlasoft. The formed entity had two business divisions, the IT business and the engineering and mobility solutions business.

The latter business was demerged from the company under the name KPIT Engineering which was later renamed as KPIT Technologies and was listed to the stock exchanges.

The main aim of the complex restructuring by KPIT was to separate its IT and Engineering Services business.

To know more about the company, check out KPIT Technologies fact sheet and KPIT Technologies quarterly results.

You can also compare KPIT Technologies with its peers on our website.

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