← Throughline · holding view Deep analysis ↗ Q1 FY26
KPITTECH KPIT Technologies Ltd · Auto SDV Q1 FY26 · concall
Pattern: q1 q2 stalled deal

Honda cancellation and two SDV ramp-downs forced a reset.

1 deflection · 5 weak · 5 clean — pushback across 6 of 11 Q&A turns

Focused evidence 6 of 11

Karan Uppal · PhillipCapital Indiaweak

The first question is on the overall deals. So have you seen any pickup in terms of the projects which were stalled or delayed due to macro uncertainty in last few months? And do you expect Q2 to stabilize? Or there could be some additional drop in revenue in Q2?

I will tell you about the environment. We don't talk about quarter-to-quarter and anything specific. But I think in quarter 1 as well as quarter 2, the way we see is that if you remember, last year, we had some onetime income, which I mentioned also at the end of the year last time and during the opening remarks here. Many of that income had gone, but I think it has been compensated by the new wins or some of the start of the projects. So already, we see some of that. but I think we –have not ramped up to our expectation in quarter 1 and quarter 2, but we do believe that in H2, sometime in the H2, it will start growing.

Aman Soni · Nvest Analytics Advisory LLCweak

Congrats for the resilient performance despite a tough quarter. My first question is on new tie-up, as JSW Motors first new New Energy vehicle is expected to reach the market in the second half, can we assume that like you mentioned in the opening remarks as well, Q3, we will be starting the execution. So I want to understand like what is the size and scope of this contract, that is one? And is there any strategic correlation between KPIT's recent entry into China and securing this partnership?

We don't like to comment on more details on the client project. But I may say that this is specific to India program. And a lot of work we will be bringing in what assets we have, and we will be adapting it more for India market –This will be about 3 years kind of a program. And this is much like the other programs we undertake, and I cannot talk about the numbers on this specific program.

Chandramouli Muthiah · Goldman Sachsweak

My first question is just on head count planning for the year. So I think the last 3 years, we've had between 15% and 30% sort of head count addition in F '22, '23, '24 and F '25 was sort of a little bit of a reset year where it was flat. So just going forward this year with back half recovery expected? Just want to understand how you're looking at sort of head count additions, just given that I think this quarter, we've had a slight maybe net reduction in headcounts.

Yes. so I'll answer this in 2, 3 ways. One is, of course, our growth has been flattish for the last few quarters and maybe we are expecting another 1 quarter of growth in that range. So, looking at that, of course, we manage our head count based on how we see the next quarters, right? And based on that, what we have done is if you look at for last year, our attrition is around 7% or so on an annual basis. At that range, we have not added, filled the bench as we generally would do.

Manik Taneja · Axis Capitalweak

I basically had some clarification questions with regards to our segmental margins. If you could talk about what's driving the quarterly volatility when it comes to segmental margins, especially when it comes to the European markets as well as the ROW Geography?

In terms of segmental margins, I think if you look at it is basically recorded basis, Entity financials. Those are getting converted at the currency rates that apply. And this quarter, we have seen some changes. Alongside that, as Mr. Patil mentioned, we have seen a significant change to fixed price based model and that is also driving the changes in the business model and thereby the margins that you see in the segment.

Sandeep Shah · Equirus Securitiesweak

Congrats on a great execution again in a difficult macro. Sir, just one question and some of your remarks implies that the contribution from India and China may go up. In that scenario, it may have some margin impact because margins in this country could be slightly lower versus company average.

I would encourage you not to assume that because I think as we talked about, we are changing the business model, trying to do it in a different way using different areas. And over the time, we will also talk about how we are building platforms and products which could become the significant part of our business. I think we are using some of these in these markets to maintain our margins.

Anand Bhaskaran · KCM Wealth Managementdeflection

Congratulations on a good set of numbers. I just want to know your -- just to get a perspective of the hiring process. And one last question is like do you have any guidance for the next 2, 3 years in terms of revenue growth?

I had said it, but right now, I think we'll come back when we have not talked about this year, and we'll not talk about this year. And we'll come back when we believe the markets are a bit stable.

▸ Other Q&A (5)
Bhavik Mehta · JPMorgan

Just one question, Kishor, you mentioned that you expected tariff which are uncertain to settle down in a quarter. Is this based on client conversations that we're getting confidence that things will start improving from 3Q onwards?

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. And right now, we believe because we have a very strong pipeline, and I think the scale-up is not happening because of the uncertainty or wherever there is a priority, the client is coming to us specifically when they really need speed, which is required for the completion of most of their programs. But that comes at a cost of some kind of a cannibalization of the existing business also.

Nitin Padmanabhan · Investec

I think it's been pretty solid execution in a very tough quarter, both on deal wins and margins. I wanted your thoughts on a couple of things. So first is, I think, we have had a lot of OEMs make a lot of announcements, like I think Honda spoke about their change in plans on or at least pushing out plan from an EV time line perspective and a lot of things, Daimler today, there was a new guidance on lower volumes and so on and so forth.

So Nitin, let's start with the first question. In terms of the spend, obviously, there is a lot of prioritization, reprioritization that's been done given the cost pressures that are being faced by all the OEMs across the globe. The basic thinking is they're making investments in the features that make sense and that they have to bring into production immediately in order to remain competitive. And there are two specifics. I think it's becoming a default that everybody has a smart cockpit or an e-cockpit. And secondly, it has Level 2+ autonomy. I think this has become the #1 priority for most OEMs.

Vimal Gohil · Alchemy Capital Management

Congrats, good quarter. Just -- you've been talking about making some inroads in China, and now we have a very firm inroad in India as well after this announcement. I just want to -- could you just put some more light on the nature of work in these two geographies, especially China? Is -- what kind of work are we doing? Is it very different from what we've been doing for clients across EU and U.S?

Look, currently in China, we have at a high level, we are looking at all the three stakeholders. One is global OEMs in China, which we have engaged, our existing clients, and we have engaged some of our existing clients in China. The second thing, which is a little different, because the ecosystem in China is very different. So we are working with some Tier 1s, Chinese Tier 1s, specifically to get a better understanding of innovation and technology, which is coming in certain areas like digital cockpit and autonomous and some of these.

Keshav Karwa · White Pine Investment Management Private Limited

Sir, my question was, what are the strategies that you have implemented in China market and as well as in India market. And how are you seeing the demand shaping up in next, let's say, 2 to 3 years?

I mean, in both the markets as in the India market, we are seeing reasonable traction actually. And we believe that we would like to make sure that we are dominantly present in different parts of the market. And frankly, also beyond business, we bring the best of the knowledge we have across the world to really build ecosystem in India, which will help them in the long term for the industry to compete with the best in the global part.

Mihir Manohar · Carnelian Asset Management

Congratulations on good execution in a difficult environment. So I wanted to understand on the China and India pipeline. I mean so how large or how material are this pipeline? Because as of now, I think they don't contribute much to the business. I mean, would it be sufficient for us to offset this slowdown, which is clear in Europe and U.S. part of the piece. Just wanted to get some color around that.

I encourage you to just look at the answer I gave just now how the margins will keep. The model is not about T&M, the model is not about the bill rates. It is about the overall solution, how we charge the platforms and the products and then the, of course, AI-infused mobility solutions. So these are the changes in the model we are bringing. I will not give any specific numbers, but I can tell you that in 2 years, this will be a 3-digit number in terms of revenues, India, China together.

▸ Prepared remarks (3 blocks)
Welcome to quarterly investor call. I will just go through quickly the key highlights of the quarter. year-on-year growth has been <strong>12.8%</strong> in rupee terms and 7.8% in dollar terms. EBITDA has grown year-on-year by 12.4%. We are very happy that in these uncertain times, the EBITDA remained strong at 21%. EBIT was at 17%. PAT is INR 1719.1 Mn. There is a variance as compared to the last quarter, basically because of the onetime income we had last time because of QUALCOMM's investment into Qorix as well as a net negative impact of INR272 million because of the currency changes. The wins during the quarter have been $241 million. The growth has been mainly in powertrain and connected areas, both across U.S.A. and Europe and basically in the passenger car vertical. In terms of commercial, there is certain drop, and it is very specific to this year's ramp down, that happened in a client, which we believe now will go into the growth mode from 1 quarter down the line. In terms of overall quality of the revenue, fixed price projects have moved from 60%, to 62.5%. It is very important because this allows us moving to the business model and which we would like to move into in the future. The head count has been 12,545 from 12,873 from the last quarter. On the Pipeline. Overall, the pipeline remains strong. We believe that based on what we have won and the way the movement of the pipeline is appearing in the last few weeks and also based on some of the wins we had.
I think we have this pipeline based on the passenger cars, but we believe that in the Commercial Vehicle vertical -- there will also be growth in off-highway and commercial, which will kick in, in the next few quarters. We are also very bullish about China and India. We can see that the pipeline from both these geographies has increased. And you have seen an announcement about the JSW engagement, which we have won. I must say that we are very bullish about where we stand in terms of AI competency and the kind of solutions we are in the process of building in terms of AI-infused mobility. We believe, based on our interactions with the clients as well as overall industry players, we are ahead in terms of our AI journey specific to mobility, and this gives us a very substantial competitive advantage as compared to our competition to win more business. Overall, as you know, the geopolitical issue because of the tariffs and the intense competition between the OEMs and the China competition is still there, but we believe it will settle down in a quarter. We believe that the solutions approach is what the clients are looking for to bring in speed and a reduction in the cost. We believe that along with our products and platform strategy and this AI-based solutions, we will be in a position to have certain wins and H2 will be higher than H1. And as we move into the second half, we will start gaining the growth momentum.
year-on-year growth has been <strong>12.8%</strong> in rupee terms and 7.8% in dollar terms. EBITDA has grown year-on-year by 12.4%. EBITDA remained strong at 21%. EBIT was at 17%. PAT is INR 1719.1 Mn. There is a variance as compared to the last quarter, basically because of the onetime income we had last time because of QUALCOMM's investment into Qorix as well as a net negative impact of INR272 million because of the currency changes. The wins during the quarter have been $241 million. fixed price projects have moved from 60%, to 62.5%.
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