KPIT Technologies shares plunge 10% to lower circuit as company flags weaker Q1 FY27: All you need to know

As expected, KPIT Technologies shares crashed in the opening deals on Wednesday, July 1, as the company, on Tuesday, post-market hours, said that it expects the financial performance for Q1 FY27 (April to June period) to be lower than expected previously, due to a sudden drop in revenues in the last few weeks.

The company announced a preliminary update on Q1 FY27 financial performance and its outlook for the remainder of the year, following recent announcements by multiple European automakers.

The stock was locked in the 10% lower circuit limit at ₹604.40 on the NSE.

Financial impact: What the company said

KPIT Technologies said that there is an expected decline of nearly 1% in USD-reported revenues for Q1FY27 compared to Q1 FY26 (YoY), primarily due to sudden actions by some European OEMs triggered by their recent profit warnings/ adverse business outlook.

"This impact was not seen coming earlier and has been realized only in the recent weeks. Such sudden actions are a short-term phenomenon. In the long run, cost-cutting measures by clients would imply more outsourcing and offshoring with more automation led by our products and solutions, which is already indicated by the said clients and evidenced earlier during COVID & similar circumstances," the company said in its press release.

Profit impact

The operating profitability (EBITDA margin) and the net profit margin for Q1 FY27 would decline sequentially, proportionately higher than the revenue decline, since there is no window for cost optimisation during this short period, KPIT Tech added.

What lies ahead: Stabilisation and recovery

While the H1FY27 performance would be unsatisfactory, KPIT Tech said that the fundamentals of its business remain strong. "As we had indicated in our communications earlier, there is strong traction in the Products and Solutions business, Trucks and Off-Highway sub-vertical and US, Korea and India markets," the press release added.

In Passenger Vehicles, growth is also supported by new client acquisitions. In terms of technology domains, autonomous, connected, after-sales, and full vehicle design and engineering show promising traction. These growth levers are supported by a resilient order book and growing pipeline.

"We are executing specific AI-led productivity improvement and cost containment measures to establish a firm foundation for an upward margin trajectory. In order to realise the growth opportunities, we continue to invest in AI-led products and solutions," it added.

The company further said they are confident in its ability to demonstrate sustainable, profitable growth during the second half of the fiscal year with a sound sequential quarterly growth in Q4 FY27 to lay a solid growth foundation for FY28 and beyond.

About KPIT Technologies

KPIT Technologies Ltd. is a Pune-headquartered technology company that specialises in embedded software and product engineering services for the automotive and mobility industry. The company operates development centres across Europe, the United States, Japan and China.

Founded in 1990 by Ravi Pandit and Kishor Patil as KPIT Infosystems, the company was established by the two chartered accountants after their stint at Kirtane & Pandit Chartered Accountants (KPCA). KPIT made its stock market debut through an initial public offering (IPO) in 1999.

In 2002, KPIT partnered with the IT division of Cummins Engineering to form KPIT Cummins Infosystems, a joint venture focused on embedded software and digital transformation for the automotive and manufacturing sectors. Between 2002 and 2013, the company expanded its global footprint, broadened its client base and completed several strategic acquisitions.

Over the years, KPIT acquired companies such as CG Smith, the TVS Harita Mechanical Engineering Team and Germany-based in2Soft Diagnostics to strengthen its capabilities. In July 2018, the company was renamed from KPIT Cummins Infosystems to KPIT Technologies Ltd. after Cummins’ stake was diluted from 13% to 6%.