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Summary: This auto-tech mid-cap delivered one of the best five-year runs on the Street. Today, it's down 30 per cent from its peak valuation. What caused the fall, and will the stock recover, or has it already seen its best years? Let’s unpack the full story.
When a stock delivers 83 per cent annualised returns over five years, you don’t expect it to be selling at a bargain. But that’s exactly the case with KPIT Technologies, the auto-tech specialist that would have turned a Rs 1 lakh investment into over Rs 20 lakh in just half a decade.
Now, after a sharp de-rating, the stock is trading at a monumental discount—30 per cent below its five-year median P/E—from a rich 65 per cent premium it commanded barely a year ago.
For investors looking for strong growth at sensible valuations, KPIT offers an intriguing setup. But first, let’s look at how this stock came to our attention, before diving into whether its recent correction is an opportunity for investors or not.
Why KPIT Tech stood out
We scanned the mid-cap universe to spot out firms with reasonable valuations despite solid earnings track record, using four filters: five-year EBIT growth above 12 per cent, a Value Research Growth Score over 7, annual stock returns exceeding 20 per cent over the last five years, and a P/E lower than its five-year average. Four names made the cut. After excluding banks and comparing Stock Ratings, KPIT stood out.
How it became a multibagger
With the global shift towards electric, connected and autonomous vehicles, OEMs needed tech specialist partners to help them build the next generation of software-defined cars.
KPIT—after its demerger from Birlasoft in 2018—used its deep domain in automotive software to fill the gap, becoming the go-to partner for many global auto makers. It now earns around 75 per cent of its revenue from the US and European markets, riding the tailwinds of tech-led transformation in mobility.
This focus propelled the company’s financials and investor returns. Net profits have compounded at over 40 per cent annually over the past five years. Return on equity has jumped from 14.8 per cent in FY20 to 31 per cent as of March 2025, with margins expanding significantly.
| Stock | Current P/E | 5-year median P/E | 5-year revenue growth (%pa) | 5-year average ROE (%) | Stock Rating |
|---|---|---|---|---|---|
| KPIT Tech | 41.12 | 58.16 | 22.06 | 21.74 | ★★★★ |
| Data as of July 9, 2025 | |||||
So, what’s behind the recent fall?
Despite the strong structural story, the near term has turned rocky. KPIT’s largest market, Europe, is slowing against a weak macro backdrop — car registrations are falling and costly EV transitions are forcing OEMs to delay capex, lowering demand visibility for its software solutions.
The US auto supply chain is also feeling the heat, thanks to tariffs and geopolitical noise. On top of this, Chinese EV makers are eating into market share and increasingly building tech in-house, reducing outsourcing.
But that’s not it. There’s also a structural reason for likely slower growth ahead.
When KPIT entered these markets post-demerger, its offerings were cutting-edge and scarce — few other players were delivering the kind of embedded automotive software it brought to the table. That early-mover advantage powered rapid adoption and market-share wins.
Today, that novelty is fading. The tech is no longer new or unmatched. Other vendors are catching up, OEMs are spoilt for choice, and the category has matured. As a result, KPIT could see its growth track in line with the broader market rather than above it.
Still worth the 41x multiple?
At 30 per cent below its long-term average valuation, the stock may look attractive, but that depends on whether the past can be prologue. If future growth merely mirrors the market's, even this discounted multiple could prove rich for a strong player like KPIT.
Before you buy your next stock, read this
Stocks like KPIT Tech can look tempting after a steep correction, but only a deeper look reveals whether the growth story is still intact or the glory days are behind it. That’s exactly where Value Research Stock Advisor comes in.
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Also read: This stock grew ₹1L to ₹2 cr from just dividends. Here's how
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