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    KPIT Technologi.

    KPITTECH
    Information Technology·30 Jul 2025
    Management Summary

    KPIT Technologies reported a resilient Q1 FY26 with 12.8% rupee revenue growth and a strong 21% EBITDA margin, driven by $241 million in deal wins. While PAT was affected by one-time items and currency, the company is strategically shifting towards fixed-price projects and expanding in India and China. Management expects H1 to remain uncertain but anticipates growth momentum to pick up in H2 FY26.

    Highlights

    6

    • Rupee revenue grew 12.8% YoY, reaching strong performance despite market uncertainties.

    • Dollar revenue grew 7.8% YoY, indicating robust international demand.

    • EBITDA grew 12.4% YoY, demonstrating operational efficiency.

    • EBITDA margin remained strong at 21%, showcasing stable profitability.

    • Deal wins totaled $241 million this quarter, primarily in powertrain and connected areas.

    • Fixed price projects increased from 60% to 62.5%, reflecting a strategic shift towards a more solution-oriented model.

    Concerns

    5

    • Headcount reduced from 12,873 to 12,545, indicating a net reduction.

    • PAT of INR 1719.1 million was impacted by a one-time income in the previous quarter and a negative currency impact of INR 272 million.

    • A certain drop in commercial revenue was observed due to a client ramp-down, though expected to recover.

    • H1 FY26 is anticipated to remain unstable or uncertain due to macro factors.

    • Geopolitical issues, including tariffs and OEM/China competition, continue to pose challenges.

    What Changed1

    vs Q2 FY26

    Risks discussed4 → 5 (+1)

    Key financials

    Single quarter

    08 metrics
    1. 01Revenue Growth (Rupee)—+12.8%YoY
    2. 02Revenue Growth (Dollar)—+7.8%YoY
    3. 03EBITDA Growth—+12.4%YoY
    4. 04EBITDA Margin21%
    5. 05EBIT Margin17%

    Order Book

    high confidence

    Inflow this qtr

    USD 241 million

    Pipeline

    deal pipeline tcv

    Overall, the pipeline remains strong, with increased activity from China and India, and strong presence in Europe.

    Cancellations / Deferrals

    • other:Certain drop in commercial due to client ramp-down, expected to go into growth mode from next quarter.

    "The pipeline remains strong, with significant wins this quarter, but some existing business was impacted by client ramp-downs and reprioritization."

    Source:
    Prepared remarks

    Capital allocation

    4
    high confidence
    CategoryHeadline
    M&A

    Qorix

    joint venture · integrated

    M&A

    JSW

    Other · signed

    M&A

    Caresoft

    acquisition · pending regulatory

    M&A

    Trentar (Sodium-ion battery technology)

    Other · closed

    Guidance & targets

    7
    CategoryTargetPriority
    Profitability
    EBITDA Margin
    21%
    		High
    Revenue
    India & China Revenue
    3-digit number
    		Medium
    Growth
    H2 FY26 Growth
    higher than H1
    		High
    Growth
    Europe Growth
    lead growth
    		High
    Growth
    Japan Growth
    broad-based consistent growth
    		Medium
    JSW Engagement
    Scaling of JSW program
    scaling up
    		High
    HR Processes
    Rollout of HR process changes
    rollout next quarter
    		High

    Caresoft acquisition closure

    This quarter (Q2 FY26)
    CurrentPending fulfillment of condition precedent CPs
    TargetClosed

    Why it matters

    Will contribute to China offering and consolidate results, impacting future revenue and strategic presence.

    Yes. So we are in that process, we had certain, I would say, condition precedent CPs, which are still not fulfilled. So, we are waiting for that. We do hope in this quarter, it should happen.

    How to verify

    capital_allocation.m_and_a[target='Caresoft'].status

    Risks & concerns

    5
    RiskSeverity

    Geopolitical issues (tariffs, OEM/China competition)

    Tariffs and intense competition between OEMs and China competition are still present, impacting market certainty. — Management acknowledged

    medium

    H1 FY26 instability/uncertainty

    H1 is expected to remain unstable or uncertain, affecting growth momentum. — Management acknowledged

    medium

    Client spend reprioritization and cannibalization

    OEMs are prioritizing spending on critical features and cutting other areas, leading to cannibalization of existing business and impacting growth. — Management acknowledged

    medium

    Currency volatility

    Potential for currency changes to cause 'havoc' on margins, though not a primary concern for maintaining 21% EBITDA. — Management acknowledged

    low

    Slow conversion of deal wins to revenue

    Despite strong deal wins, conversion into revenue is taking longer due to client budget constraints and shifting priorities. — Analyst acknowledged

    medium

    Q&A highlights

    8

    “Yes. I mean what we see in the newspapers and overall, what you know and what we talk to government and understanding and of course, the clients. I believe in a quarter or so, I think there will be more certainty.”

    Addresses macro uncertainty and potential timeline for improvement in client spending confidence.

    asked by Bhavik Mehta

    2 min read6 chapters

    Detailed Narrative

    01

    Q1 FY26 Financial Performance and Key Metrics

    KPIT Technologies reported a 12.8% YoY growth in rupee terms and 7.8% in dollar terms for Q1 FY26. EBITDA grew by 12.4% YoY, maintaining a strong margin of 21%. PAT stood at INR 1719.1 million, which was impacted by a one-time📎 income from the previous quarter and a negative currency impact of INR 272 million. Deal wins for the quarter were $241 million, primarily in powertrain and connected areas, with fixed price projects increasing from 60% to 62.5% of the revenue mix.

    02

    OEM Spend Prioritization and Business Model Evolution

    OEMs are currently reprioritizing their spending due to cost pressures, focusing on critical features like smart cockpits, e-cockpits, and Level 2+ autonomy, along with cybersecurity and functional safety. KPIT is adapting by offering AI-driven validation solutions, which, while winning new business, can lead to cannibalization of existing services as clients reallocate budgets. The company is strategically moving towards a more product- and solution-oriented business model, aiming for better productivity and margin maintenance.

    03

    Geographic Expansion and Pipeline Strength

    The company is bullish on growth in China and India, noting an increased pipeline from both regions, including the recent JSW engagement in India, a 3-year program expected to scale from Q3 FY26. Europe remains a strong pipeline region, with several deals in process and anticipated to lead growth in the coming quarters. The US market also shows potential, particularly in off-highway and commercial vehicle segments, with growth expected in the quarters ahead.

    04

    Talent Management and HR Initiatives

    Headcount saw a slight reduction from 12,873 to 12,545, managed in response to flattish growth and a 7% attrition rate. KPIT continues to hire freshers, focusing on AI-amenable talent. Significant changes are planned for HR processes, including realigning variable pay to market standards and introducing productivity-based incentives. These changes are expected to be in position by the end of Q2 FY26, with a full rollout next quarter.

    05

    Qorix Platform and Sodium-Ion Battery Technology Updates

    The Qorix platform is gaining traction, with a large European OEM in advanced stages of engagement, potentially becoming a new client in the next quarter or two. Regarding sodium-ion battery technology, the formal transfer to Trentar occurred in February 2025. However, license revenue from this technology is expected to materialize in 2-3 years, contingent on factory stabilization and production ramp-up.

    06

    Outlook and Growth Momentum

    Management anticipates H1 FY26 to remain somewhat unstable due to geopolitical uncertainties and client reprioritization. However, they expect a stronger H2, with growth momentum picking up as market conditions stabilize and new wins, particularly in India, China, and Europe, begin to scale. The company aims to maintain an EBITDA margin of 21% in the foreseeable future, leveraging its product and platform strategy.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.