KPIT Tech Share: Is the Growth Story Losing Steam? Here’s What Goldman Sachs Says 

Synopsis: Shares of KPIT Technologies are in focus after Goldman Sachs cut its target price by 16% and trimmed earnings estimates, citing weaker client spending and slower automotive R&D investments, raising concerns over the company’s near-term growth outlook.

The shares of this global technology company with software solutions that will help mobility leapfrog towards an autonomous, clean, smart and connected future are in the spotlight after Goldman Sachs cut their target by 16 per cent. 

With a market capitalisation of Rs. 15,195 cr, the shares of KPIT Technologies Ltd closed at Rs. 554.30 per share, down from its previous close of Rs. 562.80 per share. The stock has been under significant pressure, declining 56% over the past year, 52% on a year-to-date basis, 53% in the last six months, and 27% over the past month. The stock is down by 58% from its 52-week high of Rs. 1,328.80 per share. 

Goldman Sachs Commentary 

Goldman Sachs has maintained its ‘Neutral’ rating on KPIT Technologies but lowered its target price to Rs. 637 from Rs. 740, citing a weaker near-term business outlook. The brokerage expects the company’s Q1 revenue to decline by around 5.2% quarter-on-quarter, reflecting slower demand and execution during the quarter. It also believes the slowdown could continue into the first half of FY27.

As a result, Goldman Sachs has reduced its EPS estimates for FY26, FY27, and FY28 by 15%, 12%, and 12%, respectively, to account for the softer growth outlook and weaker earnings expectations over the next few years.

The reduction is primarily driven by weaker client activity and a slower-than-expected recovery in spending on electric vehicle (EV) software and engineering research and development (R&D). Headwinds in the first half of the financial year are expected to lead to flat revenue growth for FY27.

Analysts suggest any meaningful recovery will depend on a pickup in automotive R&D spending by global car manufacturers (OEMs) in the second half of FY27. Investors will also be closely watching the progress on integrating Cymotive, an automotive cybersecurity company acquired by KPIT.

In conclusion, while KPIT Technologies remains well-positioned to benefit from the long-term shift toward electric, connected, and software-defined vehicles, Goldman Sachs believes the near-term growth story is losing momentum due to weaker client spending and slower automotive R&D investments. 

A sustained recovery is likely to depend on stronger demand from global automakers in the second half of FY27, making upcoming quarters crucial for assessing whether the company’s growth trajectory can regain pace.

KPIT Technologies Ltd is one of the leading Indian technology companies that specialises in software and engineering solutions for the global automotive and mobility industry. 

The company partners with major automobile manufacturers and Tier-1 suppliers to develop technologies for electric vehicles (EVs), autonomous driving, connected vehicles, vehicle diagnostics, and software-defined vehicles (SDVs). With a strong presence across Europe, the US, Japan, and India, KPIT derives a significant portion of its revenue from global automotive clients.  

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on tradebrains.in are their own, and not that of the website or its management. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Trade Brains Technologies Private Limited or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.

The post KPIT Tech Share: Is the Growth Story Losing Steam? Here’s What Goldman Sachs Says  appeared first on Trade Brains.