India is the world’s largest sourcing destination for the information technology industry, accounting for approximately 67% of the US$130 billion market. The industry employs about 10 million workforce and has led the economic transformation of the country and altered the perception of India in the global economy. India’s cost competitiveness in providing IT services, which is approximately three-four times cheaper than the United States, continues to be the mainstay of its unique selling proposition (USP) in the global sourcing market. However, India is also gaining prominence in terms of intellectual capital, with several global IT firms setting up their innovation centres in India. The IT industry has also created significant demand in the Indian education sector, especially for engineering and computer science. The Indian IT and ITeS industry is divided into four major segments—IT services, business process management, software products and engineering services, and hardware. Indian IT’s core competencies and strengths have attracted significant investments from major countries to the tune of a cumulative foreign direct investment inflow worth US$21.02 billion between April 2000 and March 2016.
KPIT Technologies Ltd is a global technology company specialising in providing IT consulting and product engineering solutions and services to automotive, manufacturing, energy & utilities and life sciences companies. Together with its customers and partners, it creates and delivers technologies to enable creating a cleaner, greener and more intelligent world that is sustainable and efficient. A leader in technology solutions and services, KPIT currently partners with more than 200 global corporations. Its business IT solution offerings help clients run their businesses more efficiently and smartly, while its product engineering solutions enable customers to build products that are energy efficient, cleaner, safer and yield more comfort for their end-customers. Leveraging its technology and domain prowess, KPIT partners with clients to co-create transformational value that provides sustainable competitive advantage to their businesses. The company has filed a provisional patent in the automotive domain during this quarter. At the end of this second quarter for the financial year 2016-17, the number of total patents filed stood at 55, including 48 patents with complete specifications. KPIT performance during the second quarter of the current financial year has been more and less steady, with the total revenue at Rs 830.98 crore and net profit seen at Rs 56.18 crore. The management has been increasing the pace of growth and investing in the right areas and hence most analysts and fund managers are quite bullish on the KPIT stock from the medium term perspective. The stock is an excellent buy at the current market price of Rs 140. At 12 times price earnings ratio for the current financial year, the KPIT share can easily trade at over Rs 170 in six months. It can give a 25% price appreciation for portfolio investors holding the stock till April next year.
Rajiv Kapoor is a share broker, certified mutual fund expert and MDRT insurance agent.