Goldman Sachs Slams KPIT Target: Stock Price Sinks as EV R&D Spending Weakens, FY27 Growth Looks Flat
Shares of KPIT Technologies Ltd traded largely stable in early trading on Wednesday, despite receiving a reduced target price from the brokerage firm Goldman Sachs. While maintaining a 'Neutral' rating, Goldman Sachs significantly cut its target price, citing persistent headwinds related to weaker client activity and a sluggish recovery in electric vehicle R&D spending.The stock is currently valued at Rs 558.85, trading down 0.63 percent in the morning session. This movement contrasts sharply with its performance year-to-date, as the shares are down 51.5 percent, substantially surpassing the 6.7 percent decline seen in the Nifty 50.
Goldman Sachs Slashes Target amid EV Spending Concerns
Goldman Sachs reduced its target price for KPIT Technologies from Rs 740 to Rs 637. The brokerage anticipates that the company will report a sequential revenue decline of 5.2 percent in the upcoming June quarter.Furthermore, the firm expects FY27 revenue growth to remain flat. This revised outlook is based on continued concerns surrounding spending patterns during the first half of the financial year. Goldman Sachs also lowered its FY26-FY28 earnings per share estimates by up to 15 percent.
Near-Term Outlook Faces Challenges
The company recently came under intense selling pressure after reporting a profit warning concerning its June quarter performance. The company also warned that September-quarter revenue was expected to remain broadly aligned with the previous June quarter’s figures.This situation has prompted several other brokerages to cut their estimates due to concerns over reduced spending by European automotive customers. Analysts widely agree that the first half of FY27 is likely to remain a challenging period for the company.
Path to Recovery Hinges on OEM Spending and Integration
Despite the cautious near-term view, Goldman Sachs suggested that investor focus may shift positively toward the second half of FY27. This later period holds the potential for demand conditions within the market to improve.The brokerage identified two critical factors that will define KPIT's trajectory. These include monitoring the pace of research and development spending by global automotive original equipment manufacturers (OEMs). Another key factor is the progress made on integrating Cymotive, the automotive cybersecurity company acquired by KPIT.
Disclaimer: Due care and diligence have been taken in compiling and presenting news and market-related content. However, errors or omissions may arise despite such efforts.
The information provided is for general informational purposes only and does not constitute investment advice, a recommendation, or an offer to buy or sell any securities. Readers are advised to rely on their own assessment and judgment and consult appropriate financial advisers, if required, before taking any investment-related decisions.
Any views, opinions, or statements expressed, where applicable, are those of the respective analysts or experts and do not reflect the views of this website. The website has no association with such viewpoints and does not assume any responsibility for them.