KPIT Tech shares down 6% Amid Challenging Business Conditions

On Tuesday, the KPIT Technologies shares fall by 5.7 percent on NSE, touching a day’s low price of Rs. 1,310.50 after the exchange filings revealed that it finds itself navigating a challenging and uncertain macro environment. The company’s recent mid-quarter update highlights several factors shaping its near-term outlook, including a slowdown in deal conversions, geopolitical tensions, and evolving market dynamics across key geographies.

The broader business environment remains clouded by rising geopolitical concerns and ambiguity around global tariff scenarios, which have contributed to a cautious sentiment among clients. While the KPIT’s management said that the business pipeline continues to be robust, the pace of conversion from pipeline to actual revenue has been notably slower than previously expected. This development is particularly evident in regions like the United States and Asia, where uncertainty looms and clients are taking longer to commit to new projects. In contrast, Europe stands out as a relatively positive region.

Within its core segments, KPIT has reported that they have seen some wins in the Trucks and Off-highway verticals. These wins are strategically important as they diversify revenue streams and strengthen KPIT’s positioning in segments for long-term growth. However, the ramp-up of these new contracts is progressing at a slower pace than expected, further impacting near-term revenue visibility. Along with these challenges, there is are parts of internal cannibalisation which is happening. Like in some instances, where new project wins have come, it is at the expense of existing revenues, as clients reallocate limited budgets to immediate priority areas rather than expanding overall spend.

KPIT is responding to these headwinds by intensifying its focus on offshoring, aiming to deliver cost efficiencies for clients and protect margins in a constrained spending environment. The company anticipates that offshoring will continue to grow, aligning with clients efforts to optimise costs and maintain competitiveness. Along with these efforts, KPIT does not expect to benefit from any one-time gains in the upcoming quarter, unlike the previous quarter, which saw such gains boost reported results. Additionally, recent volatility in foreign exchange rates is likely to result in deficits in other income, which can further impact the bottom line.

Amid these operational challenges, KPIT is making strategic moves as the board has recently approved the 100 percent acquisition of Caresoft’s Global Engineering Solutions business. The deal is expected to close by the end of the current quarter, subject to the satisfaction of closing conditions. This acquisition can improve KPIT’s capabilities in the Trucks and Off-highway segment, and aid its manufacturing engineering solutions portfolio, and accelerate its foray into the China market. KPIT expects the consolidation of Caresoft’s business to contribute approximately 4 percent growth in FY26 compared to FY25, reflecting both the strategic and financial rationale behind the deal.

The entry into China represents a milestone for KPIT, given the market’s scale and the rapid evolution of mobility technologies in the region. By leveraging Caresoft’s established presence and expertise, KPIT aims to tap into new client relationships and capture a share of the growing demand for advanced engineering solutions in China’s automotive and mobility sectors.

In the recently announced FY25 results, the company reported Rs. 5,842 crore, which is 20 percent higher compared to the previous year. In the same period, the EBITDA margin improved to 21 percent from 20 percent. The net profit grew by an impressive 40.23 percent increase year on year. Despite the current environment of uncertainty and delayed deal conversions, KPIT’s operational agility, strong financial performance, and strategic investments position it well for the future.