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KPIT Tech shares in focus after JPMorgan upgrade, H2 growth seen improving despite client headwinds - Published OnOct 29, 2026 | 07:48 IST - Last Updated OnOct 29, 2026 | 07:48 IST KPIT Technologies’ stock had declined 21% over the past four months, while the Nifty IT index gained 22% over the same period. At around 16 times its two-year forward price-to-earnings multiple, the stock is among the relatively inexpensive names in the sector. Shares of KPIT Technologies Ltd. will be in focus on Thursday, October 29, after JPMorgan upgraded the stock to ‘Neutral’ from ‘Underweight’, citing relatively attractive valuations following its recent underperformance. Investors will also track management commentary on second-half growth, margin expansion and the recovery in demand from automotive original equipment manufacturers (OEMs). JPMorgan has set a price target of ₹520 per share. The brokerage said that KPIT Technologies’ stock had declined 21% over the past four months, while the Nifty IT index gained 22% over the same period. At around 16 times its two-year forward price-to-earnings multiple, the stock is among the relatively inexpensive names in the sector, it said. The brokerage also pointed to improving commentary from peers on automotive demand in the US and Asia, even as the European market remains challenging. Q2 performance beats expectations KPIT Technologies’ second-quarter FY27 performance exceeded JPMorgan’s expectations on revenue and margins. Revenue grew 0.5% quarter-on-quarter in constant currency terms, against expectations of flat growth. The growth came despite revenue headwinds from the company’s two largest clients, which recorded a combined year-on-year decline of around 13%, according to the brokerage. JPMorgan said this suggested that underlying growth across the rest of the business was stronger. The brokerage expects second-half growth to improve from the first half, supported by stronger business from passenger vehicle clients in the US and Asia, as well as commercial vehicle customers. This is despite continued weakness in the two largest accounts. JPMorgan also highlighted an expansion in EBITDA margin to 17.7%, up 60 basis points sequentially and ahead of both consensus estimates and its own forecast. It expects margins to improve quarter-on-quarter as revenue growth and operating leverage support profitability. What management said on the earnings call Second-half growth outlook: Management reiterated that the second half of FY27 should perform better than the first half. However, it did not provide specific growth guidance for the fourth quarter. Margin expansion: The company expects margins to improve gradually each quarter as revenue growth, business mix and AI-led productivity gains support operating leverage. On the possibility of reaching 20%–21% margins, management indicated that the timeline could extend into early next year. European automotive demand: Management described the recovery among European automotive OEMs as likely to be prolonged but said it remained confident about medium-term growth. It also identified India as an important growth market, noting that a significant portion of recent growth had come from the country. Management said technology spending remains necessary for automotive manufacturers beyond a certain point, despite pressure on the sector. Largest clients: KPIT Technologies expects revenue from its two largest accounts to decline further over the next couple of quarters, although management expects the decline to bottom out. Wage hikes: The company began implementing salary increments for employees in grades A to E during the September quarter. Further increments for other employee grades are expected in the December and March quarters. The update follows the company’s decision to defer wage hikes earlier in the year. KPIT Technologies’ total contract value (TCV) stood at $213 million in the September quarter, down around 17% from $257 million in the June quarter. Management reported a “decent improvement” in the overall pipeline and “healthy growth” in the Products and Solutions segment. KPIT Technologies shares ended 3.87% higher at ₹552.50 on Wednesday, October 28. Despite the gain, the stock remains down more than 52% so far in 2026. Disclaimer: The views and investment tips expressed by investment experts on CNBCTV18.com are their own and not that of the website or its management. CNBCTV18.com advises users to check with certified experts before taking any investment decisions.
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