Company is great and they have good momentum & have such model which may results in continuation of growth for foreseeable future. Let’s play with numbers to judge valuation.
Company is aiming for USD 1 B revenue till FY 27 (Source CNBC interview).
This implies 20% growth for 3 years.
As per Mr Patil, margin will improve to 22% from current 20% as we reach 1 B revenue. Hence profit will increase little more vs revenue. Let’s take profit estimation as 22% CAGR.
Current EPS is 22 and PE is 69, with 22% CAGR EPS will reach to 40 in Fy 27 (3 years).
CMP is Rs. 1500. If we expect 15% CAGR of price improvement than Share price in 3 years will be Rs. 2300 and PE at that time will be 57.
Considering all this, as per my opinion, current valuation seems on high side. In Q3 KPIT revise guidance (if any), if it gets some upward revision, it may be considered for investment.
Calculation 2:
Current PAT margin is 12.2%, if PAT margin improves to 15% than at 1 B sales PAT will be 1275 cr and EPS will be 47 instead of 40 as considered above.
If consider share price in 3 years = Rs. 2300 than PE at that time will be 49 @ 47 EPS.
Disc: Highest holding in my PF. Not sold not added any in last year or so. My current position is hold and track. Not sebi registered and it can’t be considered as investment recommendation.
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