Motilal Oswal's Bold Move: KPIT Technologies Gets BUY Rating, Huge 26% Upside Predicted!

KPIT Technologies posted USD 181 million in revenue for the second quarter of fiscal year 2026 (2QFY26), a 0.3% increase quarter-on-quarter in constant currency (CC) terms, exceeding the analyst's estimate of flat growth. The commercial vehicles segment was the primary growth driver, up 19.3% QoQ, while the passenger car segment declined 1.3% QoQ.

The Earnings Before Interest and Taxes (EBIT) margin was 16.4%, a 60 basis point decrease from the previous quarter and below the analyst's expectation of 17.0%. Profit After Tax (PAT) declined 1.6% QoQ and 17.0% YoY to INR 1,691 million, also below estimates.

Despite these mixed results, Motilal Oswal reiterates its 'BUY' rating for KPIT Technologies. The brokerage forecasts an Earnings Per Share (EPS) Compound Annual Growth Rate (CAGR) of 14% from FY25 to FY28, expecting it to outperform peers in the Engineering Research and Development (ER&D) space, supported by continued leadership in the automotive software vertical.

Motilal Oswal has set a price target (TP) of INR 1,500, implying a potential 26% upside. This valuation is based on 38 times the estimated earnings per share for June 2027 (Jun’27E EPS).

Impact: This research report is positive for KPIT Technologies, with the reiterated BUY rating and significant price target likely to attract investor attention and potentially boost the stock price. The outlook on EPS growth and market leadership are key positive factors, though recent margin pressure warrants monitoring.

Impact Rating: 7/10

Difficult Terms: FY26: Fiscal Year 2026, the financial year ending March 31, 2026. 2QFY26: The second quarter of the fiscal year 2026. CC: Constant Currency. Revenue growth calculated excluding foreign exchange rate effects. QoQ: Quarter-on-Quarter. Comparison of financial results between consecutive quarters. YoY: Year-on-Year. Comparison of financial results between the same quarter in consecutive years. Commercial vehicles: Trucks, buses, and vans used for business. Passenger car segment: Vehicles designed for personal transport. EBIT: Earnings Before Interest and Taxes, a measure of operating profit. PAT: Profit After Tax, the net profit remaining after all expenses and taxes. EPS CAGR: Earnings Per Share Compound Annual Growth Rate. The average annual growth rate of a company's EPS over a period. ER&D: Engineering Research and Development. Services related to product design and development. Automotive software vertical: The market segment focused on software for vehicles. BUY rating: A recommendation to purchase a stock. TP: Target Price. The price level an analyst expects a stock to reach.