New orders could put KPIT Tech on the road to recovery
ET BureauSome of the automotive clients in the European region, a major market for KPIT with around 50% share in revenue, delayed project ramp ups. Geopolitical and tariff related uncertainties, rising commodity prices, and competitive pressure from low-cost countries forced original equipment manufacturers (OEMs) to reduce tech spending. This affected the company’s top line, which declined by 4.4% sequentially to $176.8 million. Operating margin (EBIT margin) contracted by 360 basis points to 12.3% from the quarter ago following higher subcontracting costs and provisions towards acquisitions.
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The company management expects margin to improve in subsequent quarters, aided by revenue mix and productivity gains due to the use of artificial intelligence (AI) tools.
The company continued to book new orders, adding $257 million in total contract value (TCV) of new deals. It was 6.6% higher year-on-year but lower than $349 million in the previous quarter. While the new deal wins in the June quarter raise hopes for a gradual recovery, the September quarter performance is expected to stay subdued.
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“Program ramps and deal starts were pushed out, keeping near-term revenue growth subdued,” noted Anand Rathi Share and Stock Brokers in a sector report, adding that the full Europe impact is expected in the September quarter and margin recovery hinges on revenue improvement. The broker has reduced the EPS growth estimate to 8.1% from an earlier 12.3% for the FY26-28 period. It has a target price of ₹661, implying a 29.6% upside over Tuesday’s closing price of ₹509.
