Why mid-cap automotive technology stock KPIT was buzzing today

KPIT Technologies, a software integration partner for the automotive and mobility industry, was buzzing on Dalal Street counters today even as bears dominated the proceedings overall pulling down the benchmark indices by around 0.5%.

KPIT Technologies, however, shot up and ended the day up nearly 4% after it announced a significant acquisition that would likely add 10-15% to its annual topline and bottomline numbers hereafter.

It announced the acquisition of Technica Engineering, a company specializing in production-ready system prototyping (combination of network system architecture, hardware prototyping, integration), automotive ethernet products, and tools for validation. Technica Engineering is headquartered in Munich and has a presence in Spain, Tunisia, and the USA, with a team of 600+ engineers.

The deal is expected to be closed by the end of next month and will be EPS accretive upon consolidation.

KPIT will pay €80 million over the next six months besides a milestone-linked value that could be an additional up to €30 million to be paid by March 2025.

The target company had consolidated revenues of €43 million with 20% EBITDA last year.

"Mobility industry is using software to drive innovation and is creating a post-vehicle sale business model driven by delivering services to end consumers. We are constantly looking for possibilities to help accelerate our client's vision. With Technica Engineering, we will strengthen value and scale of operations across the stack. We have common strategic clients who will benefit, and we also get access to leading disruptor mobility tech companies,” said Kishor Patil, co-founder, CEO and MD of KPIT Technologies.

KPIT has engineering centres in Europe, the USA, Japan, China, Thailand and India. It has seen its revenues almost quadruple and its net profit grow five times over the last three years. The company’s share price rose six-fold in the last two years alone.