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Kpit Tech is going to own Technica entirely Vibesbullet

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KPIT Tech share price: Share of Pune-based KPIT Technologies surged on Thursday, extending gains to a third consecutive session, after Goldman Sachs maintained a target price of Rs 900 for the stock, this which implies a 50% upside potential.

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To buy to sell KPIT Technology to share

Shares of Pune-based KPIT Technologies continued to rise for a third straight session on Thursday, brushing off overall market weakness that trails its global peers, boosted by its acquisitions of four companies from Germany’s Technica Group. Goldman Sachs maintained a ‘buy’ rating on KPIT with a target price of Rs 900 – implying upside potential of 50% from Wednesday’s closing price.

KPIT Tech shares jumped 8.4% to hit Rs 649.3 at the highest level of the day, taking its cumulative gain in three consecutive sessions to 13.6%.

According to the brokerage, Technica’s 2021 revenue and EBITDA are 16% and 17% of KPIT Tech’s for the fiscal year ending March 2022.

“The proposed acquisition could expand KPIT’s capabilities in ongoing changes to vehicle operating system architecture and strengthen competencies in self-driving cars, vehicle-anywhere connectivity, ADAS systems and d The transaction could also support KPIT’s positioning in automotive/cloud networking technologies where the company has sought to expand its expertise,” Goldman Sachs said.

KPIT Tech will pay a cash consideration of 80 million euros for the acquisition Technica Engineering, Technica Electronics Barcelona, ​​Technica Engineering Spain and Technica Engineering. It will be will fully own Technica Group following the transaction, which is expected to be completed by the end of October.

The Pune-based company expects the transaction to be accretive to earnings per share at closing. He said the four companies are at the forefront of automotive production-ready system prototyping, automotive Ethernet products and validation tools.

According to Goldman Sachs, KPIT’s cash consideration for Technica involves 10 times intrinsic value to EBITDA. The intrinsic value/EBITDA ratio is a valuation multiple used to determine the fair market value of a company.

Kpit Tech is going to own Technica entirely - Here's how the street reads it

Technica’s revenue grew at an annualized rate of 24% from 2019 to 2021 compared to KPIT Tech’s growth forecast of 18 to 21% for the year ending March 2023, Goldman pointed out.

The brokerage will seek information on the following:

  • Synergy potential of the agreement
  • Justification for the seller
  • Funding mechanism/repayment periods
  • Potential new customer relationships resulting from the transaction
  • Shares of KPIT have returned almost 16% in the past month, a period in which the benchmark Nifty50 index gained around 0.5% and Nifty IT – whose 10 constituents include TCS, Infosys and Wipro – fell 8.8%.

    Kpit Tech is going to own Technica entirely - Here's how the street reads it

    India’s benchmark Sensex and Nifty50 stocks fell nearly 1% on Thursday amid weakness in financials and oil and gas stocks, although strength in FMCG stocks provided some support.

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