Why Is JP Morgan Bullish on KPIT Tech When Auto Stocks Are Under Pressure?

Synopsis: KPIT Technologies is the preferred stock for JP Morgan as it thinks that the company is in a dominant position to gain the benefits from the recovery in the auto tech industry, aided by many more factors.

The shares of this auto tech company are in focus after a global brokerage house, JP Morgan, cited numerous upticks in its business leading it one of its favourite picks in the industry. In this article, we will try to understand more about it.

With a market capitalisation of Rs 32,320 crore, the shares of KPIT Technologies Ltd closed at Rs 1,178.95 per share, up by 0.5 percent from its previous day’s closing price of Rs 1,173.15 per share. Over the past five years, the stock has delivered a robust return of 770 percent, outperforming NIFTY 50’s return of 78 percent.

Analyst Comments

Leading global brokerage house, JPMorgan, has assigned an “Overweight” rating on KPIT Technologies and has fixed a target price of Rs 1,400 per share, signalling an upside potential of nearly 19 percent from its previous day’s closing price.

The brokerage cited that IT companies focused on the auto sector have taken a hit over the past year. Global car makers pulled back on tech spending, and stocks like Tata Technologies, Tata Elxsi, and KPIT Tech all dropped hard, even though their businesses kept running smoothly.

Yet JPMorgan is betting big on KPIT Tech. They see signs that carmakers are finally warming up to tech investments again. With trade tensions cooling off and tariff threats fading, auto giants are restarting the R&D projects that cooled off over the past year. The brokerage cited that KPIT Tech has the highest exposure to auto technology spends at almost 100 percent which is far superior as compared to its rivals like Tata Tech and Tata Elxi, with 82 percent and 55 percent spending, respectively.

It also cited that the rebound isn’t about electric vehicles this time. Hybrid vehicle programs are driving most of the new spending, especially in Europe. Asia’s catching up, while the US still lags. As KPIT has a strong presence in Europe, JPMorgan thinks that the company is in a good spot as the auto tech recovery picks up speed.

Financial and other highlights

The revenue from operations for KPIT Technologies stands at Rs 1,588 crores in Q2 FY26 compared to Q2 FY25 revenue of Rs 1,471 crores, up by about 8 per cent YoY. Additionally, on a QoQ basis, it reported a minor growth of 3 percent from Rs 1,539 crore. 

Coming down to its profitability, the company’s net profit stood at Rs 169 crore in Q2 FY26, down from Rs 204 crore in Q2 FY25, which is a decline of 17 percent YoY. Additionally, on a QoQ basis, it reported a net profit of Rs 172 crore, in Q1FY26, which is a decline of 2 percent.

KPIT Technologies Limited is a global leader in automotive software and digital solutions, catering to clients from the Americas to Europe, the UK, and beyond. The company has its sights set on the future, focusing on cutting-edge areas like autonomous driving, ADAS, vehicle electrification, and software-defined vehicle solutions. 

They provide a range of offerings, including embedded software, AI-powered perception technologies, cloud integration, and innovative battery and charging platforms, along with vehicle operating systems. Additionally, KPIT excels in virtual engineering, diagnostics, and validation services, solidifying its position as a key player in the next generation of mobility technologies.

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