KPIT – CASE (connected, autonomous, shared, electric) – Focused Automotive Play

I would like to add my 2 cents on this topic.

1. Electric cars doesn’t add any additional software components except some BMS stuff. Major software development in cars is for infotainament and it has no bearing whether it is ICE or electric.
2. All big OEM’s are spending heavily on Software and I can confidently say they are not going to stop anytime soon.
3. Most OEM’s have their own strategy for Software defined vehicle such as MB.OS, VW.OS etc.
4. All big OEM’s have opened their own software arms to focus entirely on software development, reusability and to reduce lead time to market. These sw arms are a competitor to companies like KPIT, LTTS.
5. Tesla’s has first mover advantage w.r.t ADAS but everything else their european counterparts are up there.

More and more sw development from OEM’s are given to their daugther SW companies. As and when these companies are ready to take extra pie, companies like KPIT, LTTS are replaced and development happens inhouse. In Indian context, most of SW for JLR is developed by TCS, Tata Elxi, Tata technologies and JLR itself because it is easier for the OEM’s to work that way. Hence you don’t hear any company announcing they’re supplying major sw to JLR. Same is the case with Mercedes. I can say for a fact KPIT and LTTS should draw major revenue from BMW and Volvo respectively in their transportation vertical.

Having said all of this, SW providers like KPIT and LTTS should still get lot of work from OEM’s as there are scarcity of resources on their end and also in market for good SW developers.

KPIT should still continue to grow but I’m not certain if the growth rate will sustain. If KPIT’s gowth projection is faltered anytime then I think the it’ll be rerated ruthlessly in my opinion.

Disclosure:Not invested. I missed KPIT and Tejas networks back in 2019 when I didn’t hear good review from my friends who works there. Imagine my sadness when I opened my kite in 2023!.