The Hindu Business Line : KPIT Cummins Info peaks

Word on the street was that Reliance Mutual Fund and ICICI Pru were active at this counter. There was also talk of a leading bull operator — who has a stake in the company — propping up the stock.

Some broking houses have also reportedly recommended a buy at this counter. In the absence of any significant corporate development, brokers attributed the interest in the stock to `sector play' in all midcap software stocks.

"Following the verdict on HPCL, there is every likelihood that people are looking to shift sectors. There is talk that in October one could see a significant run up in software, led by Infosys which could touch Rs 6000 levels,'' a broker said.

According to analysts KPIT gained visibility post merger with Cummins Infotech. "The company is looking at stable growth, riding on the back of this joint venture,'' an analyst said. The company's reported growth trajectory involves focusing on its top five strategic customers. Top amongst these is Cummins, which is using them as a major outsourcing partner for growth. The other clients are also said to be Fortune 500 companies.

"It is one of the bettor quality companies and in recent times it has proved itself by sustaining its revenues. Hence from having no expectations, the market has started to take a relook at company fundamentals,'' an analyst said. Yet strategist Mr Sandeep Shenoy of Pioneer Intermediaries is of the view that current fundamentals do not justify market valuation. "There is no denying that it is one of the bettor run companies. Yet at these levels it is over priced,'' he said.

According to him the alliance with Cummins is yet to translate into numbers. "It will probably take a couple of more quarters before results come through. Hence it is bettor to be cautious,'' he advised.

While not denying the element of `sector play in the stock, there is also a growing perception that the stock has entered speculative mode. KPIT focuses on two verticals, namely manufacturing and banking and financial services and insurance.

The stock ended the day at Rs 232.45 up 3.40 per cent on the BSE with around 10.31 lakh shares traded. On the NSE the stock ended at Rs 232.65 up 3.79 per cent with around 20.15 lakh shares traded.

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