KPIT Technologies (KPITTECH IN) – Q3FY26 Result Update – Organic business drag continues amid solution led repositioning
Published on 31 Jan 2026
The operating performance (+1.5% QoQ CC) was above our estimates (+1.1 QoQ CC) that includes USD 3.4% QoQ inorganic contribution from Caresoft and N-Dream. The organic performance translates to revenue decline of ~1.0% QoQ, which is a third consecutive quarter of organic revenue decline. The organic revenue decline attributed to spending that the clients have deprioritized on vehicle architecture and development, especially on the US and Japan PV. Even the deal signing for Q3 remains weak at USD 202m, that translates to 9MFY26 growth of +4.7% YoY. The company has evaluated ways to overhaul its currently “service-led” offerings to off-the-shelf “solution-led” offerings with limited customization on top. Additionally, the revenue cannibalization from service to solution is a gradual move and would require 12-18 months before it completely pivots to new offering mix. We believe the transition would require additional efforts and leadership bandwidth to repurpose its offerings and stay relevant to its strategic accounts. Already a slowdown in Automotive and a transition of offering mix on top would continue to weigh on revenue growth for FY27. Additionally, the company has borrowed ~USD50m to fund the acquisitions that will create additional pressure on the bottom line. We are adjusting FY27E/FY28E revenue growth and margin on account of transition and signing weak deal TCV for 9MFY26. Our organic CC revenue and margins revised downward to 4.0%/11.5% (earlier ~9%/~14%) and 16.6%/17.3% (earlier 17.0%/17.9%). With that our EPS sees a substantial cut of 18%/19% for FY27E/FY28E. We are assigning 30x (earlier 31x) PE to FY28E earnings, translating a TP of 1,090. Downgrade to HOLD (BUY earlier).
