Thread by @NiftyBulls10x, #KPITThread on #WayForward & #OutlookCritical details picked up from Investor Call, PR, [...]

#KPIT

Thread on #WayForward & #Outlook

Critical details picked up from Investor Call, PR, Mgmt Interviews, Financial Report, etc.

Disclosure: I am invested in #KPIT

This is not an Investment advise. Please do your research before investing

#NB10x

(1/16)

#KPIT #AutoIndustry

*Auto is often blamed for global warming & source of CO2
*Many countries globally have committed to #NetZero
*As a result, Auto industry is witnessing a tectonic shift towards Battery Electric Vehicle ( #BEV) & Hydrogen Fuel Cell Vehicle (HFCV)

#NB10x

(2/16)

#KPIT #RD

*BEV & HFCV is requiring Auto industry to move in the path of software-defined vehicles
*Every company will need to develop, buy & manage lot of S/w to remain leaders
*Many cars exceed 100mn lines of code & it may double or triple in the coming decade

#NB10x

(3/16)

#KPIT #CASE

*This has led to higher R&D spends on CASE (Connected, Autonomous, Shared, Electric)
*Across Top 10 global Automakers, R&D spends on CASE will grow 3x to $61Bn by FY26
*As role of S/w & Electronics expands, Auto makers will resort to more outsourcing

#NB10x

(4/16)

#About #KPIT

*This is where KPIT has a huge play!
*KPIT is a S/w integration partner to global Automotive leaders
*They focus on #Automotive & #Mobility
*Has worldwide footprint in all major Auto hubs
*Only embedded S/w firm with deep domain expertise across CASE

#NB10x

(5/16)

#KPIT #Vision

"Becoming the world’s number one software accelerator and integrator for the automotive and mobility industry"

#NB10x

(6/16)

#KPIT #Competitors

*Local
#LTTS
#TataElxsi

*Global
#Alten
#AKKA
#Bertrandt

All these competitors operate in multiple sectors like Auto & Aeronautics while #KPIT stands out as the only one which is 100% focused on end to end #Auto sector requirements

#NB10x

(7/16)

#KPIT #Fundamentals

*ROCE: 14%
*ROE: 12.6%
*PE: 66
*Face Value: INR 10
*Promoter Holding: 40.1%
*Debt to Equity: 0.17
*Free Cash Flow 3Yrs: INR 1014 Cr

#NB10x

(8/16)

#KPIT #RevenueSource

*Revenue by market
-USA (42%)
-Europe (41%)
-RoW (17%)

*Revenue by practice
-Powertrain (39%)
-AD-DAS / Autonomous Driving (21%)
-Connected(11%)
-Others (29%)

#NB10x

(9/16)

#KPIT #USP
*7k+ domain expertise employees & hiring 2k next year
*S/w Integration partner to Global Auto leaders
*Billions of lines of code on 100’s of vehicles with models on road
*Expertise in Autonomous Driving, Powertrain Electrification, AUTOSAR & Diagnostics

#NB10x
(10/16)

#KPIT #Acquisition

#PathPartner
*Design service & solution provider of OS S/w & low-level S/w for Automotive, Camera, Radar & Multimedia devices

#FutureMobility
*S/w & feature development in Autonomous Driving, ADAS & vehicle safety & integration + validation

#NB10x

(11/16)

#KPIT #Partnership

#dSPACE for EV charging solution
*Brings together the H/w & S/w competencies of dSPACE + KPIT

#dSPACE & #Microsoft to offer homologation solution in USA
*One stop solution for easy Certification for autonomous vehicles

#NB10x

(12/16)

#KPIT #GrowthTriggers

*Focus on #HydrogenCell
-May lead to profit growth of 18 to 20% in FY22
-Sentient Labs a startup incubated by #KPIT demonstrated India’s first truly indigenously developed Hydrogen Fuel Cell Bus

#NB10x

(13/16)

#KPIT #GrowthTriggers

*Semiconductor (SM)
-Current entry-level car have 15-20 SM while high-end connected car could have 100+
-EV will require hundreds, if not thousands of SM
-Electronics, which was 30% of vehicle cost in 2010 is expected to be 50% by 2030

#NB10x

(14/16)

#KPIT #Technicals

*KPIT is already 4x from INR 125 on 1st Jan 2021 to INR 600 today
*Despite recent #Bearish market sentiments, KPIT has remained strong
*Technical chart shows the tendency to spike every quarter during Quarterly earnings & then consolidate

#NB10x

(15/16)

#KPIT

Based on 3x R&D spends on CASE & Hydrogen Cell cars with L4 + L5 Automation

My assumption for #FY25
*Sales growth +20% YoY = INR 4200+ Cr
*Margins will improve & EPS growth +25% YoY = INR 20
*Stock price = INR 1500 to 1800 or 3x from today

#NB10x

(16/16)

#KPITBased on 3x R&D spends on CASE & Hydrogen Cell cars with L4 + L5 AutomationMy assumption for #FY25*Sales growth +20% YoY = INR 4200+ Cr*Margins will improve & EPS growth +25% YoY = INR 20*Stock price = INR 1500 to 1800 or 3x from today #NB10x(16/16)

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