Is Now An Opportune Moment To Examine KPIT Technologies Limited (NSE:KPITTECH)?

March 09, 2022
  •  Updated
June 15, 2022
NSEI:KPITTECH
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KPIT Technologies Limited (NSE:KPITTECH), is not the largest company out there, but it led the NSEI gainers with a relatively large price hike in the past couple of weeks. With many analysts covering the stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, could the stock still be trading at a relatively cheap price? Let’s take a look at KPIT Technologies’s outlook and value based on the most recent financial data to see if the opportunity still exists.

See our latest analysis for KPIT Technologies

What's the opportunity in KPIT Technologies?

According to my price multiple model, where I compare the company's price-to-earnings ratio to the industry average, the stock currently looks expensive. I’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 60.12x is currently well-above the industry average of 27.95x, meaning that it is trading at a more expensive price relative to its peers. But, is there another opportunity to buy low in the future? Given that KPIT Technologies’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

What does the future of KPIT Technologies look like?

earnings-and-revenue-growth
NSEI:KPITTECH Earnings and Revenue Growth March 9th 2022

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. KPIT Technologies' earnings over the next few years are expected to double, indicating a very optimistic future ahead. This should lead to stronger cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? KPITTECH’s optimistic future growth appears to have been factored into the current share price, with shares trading above industry price multiples. However, this brings up another question – is now the right time to sell? If you believe KPITTECH should trade below its current price, selling high and buying it back up again when its price falls towards the industry PE ratio can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on KPITTECH for some time, now may not be the best time to enter into the stock. The price has surpassed its industry peers, which means it is likely that there is no more upside from mispricing. However, the optimistic prospect is encouraging for KPITTECH, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. You'd be interested to know, that we found 3 warning signs for KPIT Technologies and you'll want to know about them.

If you are no longer interested in KPIT Technologies, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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About NSEI:KPITTECH

KPIT Technologies

KPIT Technologies Limited provides embedded software, artificial intelligence, and digital solutions for the automobile and mobility sector in the Americas, the United Kingdom, rest of Europe, and internationally.

The Snowflake is a visual investment summary with the score of each axis being calculated by 6 checks in 5 areas.

Analysis AreaScore (0-6)
Valuation0
Future Growth4
Past Performance6
Financial Health5
Dividends3

Read more about these checks in the individual report sections or in our analysis model.

Outstanding track record with excellent balance sheet.