Earnings Outlook
KPIT Tech PAT seen affected by slowdown in auto sector
This story was originally published at 22:28 IST on 29 July 2025
Register to read our real-time news.Informist, Tuesday, Jul. 29, 2025
By Akshat Saksena
Mumbai – KPIT Technologies Ltd. is expected to report a substantial decline in its net profit for the June quarter, according to analysts tracking the company. Earnings of engineering, research, and development companies such as KPIT Tech are expected to be affected significantly due to their exposure to the automotive sector.
The automotive sector is facing challenges posed by uncertainties over US tariffs and increasing competition from Chinese electric vehicle manufacturers. The delay in ramp up of deals earlier won by the company is a major factor that will drag its net profit down.
The company is expected to post a consolidated net profit of INR 1.98 billion, down 19% on quarter and down 3% on year, according to an average of estimates from eight brokerages. The highest estimate for net profit is INR 2.15 billion from Nirmal Bang Equities Pvt. Ltd. and the lowest estimate is INR 1.82 billion from JM Financial Institutional Securities Pvt. Ltd.
The company's consolidated revenue is seen at INR 15.29 billion, up marginally on quarter and up 12% on year. The highest estimate for revenue is INR 15.76 billion from Nirmal Bang and the lowest estimate is INR 15.08 billion from JM Financial.
Brokerages expect the company's revenue in US dollar terms to rise marginally. A weaker dollar is expected to boost revenue from the company's European and other non-US markets. Despite the rise in revenue, brokerages expect a decline in revenue growth on quarter in constant currency terms. Nirmal Bang expects the constant currency revenue to fall 0.5% on quarter, which is the lowest estimate. JM Financial expects it to fall the highest, by 7.3%. "KPIT is expected to report a revenue decline after many quarters of excellent growth," Kotak Institutional Equities said.
The expected decline in constant currency revenue for the June quarter is due to the company's large focus on the automotive sector, which leaves it vulnerable and exposed to the slowdown in this sector. The key challenges are global demand slowdown, competition from Chinese electric vehicles, tariff related uncertainties, and China's curb on rare earth metals, ICICI Securities Ltd. said.
Low demand and competition from Chinese electric vehicle manufacturers are pressurising European original equipment manufacturers to increase efficiency and cut costs. "LTTS and KPIT are expected to witness (2.6)% and (3.5)% sequential cc (constant currency) decline, on the back of European OEMs facing stiff competition from Chinese OEMs, constraining their EV (electric vehicle) transition and R&D spend propensity coupled with tariff related uncertainty," Anand Rathi Share and Stock Brokers Ltd. said.
The recent acquisition of Caresoft business by KPIT Tech is expected to start contributing from the second quarter of financial year 2025-26 (Apr-Mar), HSBC Global Research said.
The improvement in productivity because of generative artificial intelligence-led initiatives have seen an increase in contribution of fixed price/outcome based model projects to the company's revenue. This signifies the company's transition away from the traditional time and material model to a fixed price/outcome based model. In the trailing quarter, KPIT Tech was one of the companies to have shown higher EBITDA productivity, or EBITDA per employee, in comparison to other companies with respect to last four quarter averages.
"With most IT companies acknowledging passing of productivity related benefits to enterprises, we see a gradual transition to the fixed price/outcome based models from the tradition T&M model. Eg: Mphasis, Infosys, KPIT have seen considerable increase in the fixed price/outcome based projects contribution to total revenues," Anand Rathi said.
The company's consolidated earnings before interest, tax, depreciation, and amortisation is expected to be between INR 3.16 billion and INR 3.18 billion, according to estimates from three brokerages. The highest EBITDA is estimated by Kotak while the lowest is estimated by Anand Rathi. For the trailing quarter, the company had reported a consolidated EBITDA of INR 3.23 billion. The EBITDA is expected to remain flat due to currency exchange benefits, Prabhudas Liladhar Pvt. Ltd. said.
The company's earnings before interest and tax margin based on the average estimates of six brokerages is 17.15%, the highest EBIT margin estimate is by Anand Rathi at 17.40% while the lowest is of Kotak at 16.80%. ICICI expects the margin to be flat on quarter as the decline in revenue growth is expected to be offset by tight control on discretionary costs and control on operating levers.
The company is expected to announce its June quarter results Wednesday. Analysts will monitor any update on the change in demand in the automotive industry, pipeline conversions for big deals, ramp up of new projects, and the effect of the US tariffs on client decisions. ICICI suggests investors should monitor the impact of the curbs on rare earth metals by China. The progress of the company's diversification into highway and commercial vehicles and the company's foray into the US and China markets are key metrics that should be tracked, according to HSBC. Margin levers and acquisition contribution are key aspects to be monitored according to Nirmal Bang.
Tuesday, shares of KPIT Tech closed at INR 1,218.40 on the National Stock Exchange, up 2.2%. The stock is down 1% since the company announced its March quarter earnings.
Of the 11 brokerage reports on the company available with Informist, eight have a 'buy' or equivalent rating on the stock with an average target price of INR 1,765. Two brokerages have a 'hold' rating and one brokerage has a 'sell' or equivalent rating.
Following are the June quarter earnings estimates for KPIT Technologies, in INR million, based on reports from eight brokerages in descending order of net profit estimates:
Brokerage | Net Sales (INR million) | Net Profit (INR million) | EBITDA | Revenue (million $) | EBITDA Margin (%) | EBIT Margin (%) |
Nirmal Bang Equities Pvt Ltd | 15,759.00 | 2154.00 |
| 179.00 |
| 17.20 |
Dolat Capital Market Pvt Ltd | 15,145.00 | 2060.00 |
|
|
|
|
Anand Rathi Share and Stock Brokers Ltd | 15,309.00 | 2051.00 | 3,157.00 |
| 20.60
| 17.40 |
Prabhudas Lilladher Pvt Ltd | 15,300.00 | 2,000.00 |
| 178.70 |
| 17.10 |
HSBC Global Research | 15,144.00 | 1,935.00 |
| 177.00 |
| 17.20 |
Kotak Institutional Equities | 15,493.00 | 1,913.00 | 3,180.00 | 181.00 | 20.50 | 16.80 |
ICICI Securities Ltd | 15,120.00 | 1,908.00 |
| 177.00 |
| 17.20 |
JM Financial Institutional Securities Pvt Ltd | 15,076.00 | 1820.00 | 3,159.00 |
|
|
|
Average | 15,293.25 | 1980.13 | 3,165.33 | 178.54 | 20.55 | 17.15 |
End
US$1 = INR 86.81
Edited by Ashish Shirke
For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.
Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt. Ltd.
Informist Media Tel +91 (22) 6985-4000
Send comments to feedback@informistmedia.com
© Informist Media Pvt. Ltd. 2025. All rights reserved.
To read more please subscribe
Share this Story:
