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

Q3 q4 tcv seasonality — answer hedged.

1 weak · 9 clean — pushback across 1 of 10 Q&A turns

Focused evidence 1 of 10

Sandeep Shah · Equirus Securitiesweak

Thanks for the opportunity. Sir the first question, generally, if I look at the TCV which we disclosed, the second half is generally heavier in terms of TCV wins for KPIT versus first half. Do you believe the same trend may continue this year or do you believe because of macro decision making delays can lead to a normalized trend over all four quarters rather than second half heavy than the first half? And sir, the explanation which you gave on $65 million revenue leakage, can you correlate with which period it was in terms of last year, this year, how, what is that definition?

I do not know. I mean, if you are asking me what will be the deal wins next quarter, I cannot answer it directly. But I can only say that what we have, the total wins and the pipeline is pretty strong. Our focus is on conversion and whatever we have won now to really get into implementation. So, first, it was not leakage. It was basically what the client stopped spending. That was the large part of it, which was $45 million, which I mentioned is when they stopped spending in certain programs or certain areas. And the other $20 million is what we talked about is cannibalization where we are doing currently the projects and the only thing we lost that project is because we went with a more holistic solution with them.

▸ Other Q&A (9)

Sucrit D. Patil · EyeSight FinTrade Private Limited

Good evening to the team. I have two questions. My first question is to Mr. Patil. As more tech players enter the software space, what is KPIT doing to build a strong edge not just through client wins or platform launches, but something deeper like a way of working or thinking that grows over time? And makes it hard for your competitors to copy yours?

I think the point you mentioned, I think we believe that there are 2-3 points that I have. One is that we knew about software defined vehicles, which a lot of people use the word but KPIT has been pioneering that and has the largest number of programs. The second area I believe which is very, very important is the architecture of the vehicle, which I think are the next programs which clients will come up with. The second part, I would say that AI is a major area of focus for us and in AI we have invested for a long time already. We are not only doing pilots, but some production programs also with the OEMs and the feedback which we have from the clients is this is the best-in-class solution they have seen in this area.

Nitin · Investec

Yes. Hi. Good evening. Thank you for the opportunity. So, you gave a very detailed color on the revenue impact. Just wanted your thought process on how do you see this, when do you see this reprioritization sort of impact sort of reducing? I understand, because of obviously all these trade tariffs and all of that it would have meaningfully changed priorities. Do you think a lot of the impact has already happened and we should start seeing that come off?

Yes. So, thanks, Nitin. I think one thing I have that from next quarter we will start seeing marginal growth on constant currency terms and in Q4 there will be meaningful growth. I do believe that there will be a certain cannibalization which may continue to happen next year as well. But I think our revenue growth based on the solutions will be higher than that. That is how I would put it. Because it is not about just reduction of the spend by the client, which may, if you ask me, may really get more stabilized in next couple of quarters.

Bhavik Mehta · JP Morgan

Hi, thank you. So, first question is, Kishor, you did speak that the client conversations are moving in a positive direction. But when you think about the pace of recovery over the next quarter, how should we think? Because 3Q could be flattish. 4Q itself could be like a very good growth quarter. But does that growth momentum continue going into next year or will it be more like a gradual recovery we should expect over the next 12 months?

I would be cautious right now, but I will give you more color on this by end of Q4 only, By that time, I think some of the uncertainties would be less. I would see that it will be a meaningful growth, but it would not be like a hockey stick recovery in the year.

Aman Soni · Nvest Analytics

Hi, good evening. Sir, my first question is on our initiatives on the sodium ion technology with Trentar. So, how is it going on, sir? And also on the hydrogen cell side, what are the latest updates? So, we are seeing like various things are happening in these areas, particularly the staff are getting shifted and hiring are being done. So, I just wanted to understand, where are we at present? And when can we expect these areas to start contributing to our top line in a material basis?

See, basically, when we talked about the battery and sodium-ion, we have licensed them. If you remember, the buyer investment will be substantial. In phases, they will reach up to 250 million, not in the first phase, but in phases over the next two to three years. So, the meaningful production will start after two years. And that is when we start getting the royalties.

Vimal Jamnadas · Alchemy Capital

Yes, thank you for the opportunity, sir. Just wanted to check on or double down on the plans for China. Any movement there? When could we possibly see some small, even a small contribution from there in terms of our revenues?

So, let me just answer the first question on China. I think we are making good progress. And as I mentioned, we are looking at China in 2-3 ways. One is really learning from them and investing into technologies proactively, which you are seeing. That is exactly what we are doing. The second thing is engaging with the clients, which are global clients in China and third is Chinese clients in China. We are seeing progress in all these three and we believe small revenues will occur in quarter 4.

Ankur Pant · IIFL

Hi. Thanks for taking my question. My first question is on the deal. Give me some clarification, so your three-digit multimillion-dollar deal, is that included in this quarter's TCV? And do you see a change in the timelines of, say, what they were initially planning before this slowdown, the electrification timeline or the timelines of how a particular product development would take place? Have they been right-shifted to some extent or how do you see that?

The new product development timelines have shifted by about one to two years for almost all the OEMs.

Ruchi Mukhija · ICICI Securities

Thank you for the opportunity. I have two questions. First, you have clearly demonstrated progress on profitability led by what you call the solution as well as the AI effort and productivity. Given the current context where growth is likely soft, can you elaborate how you plan or what is our strategy to reinvest these efficiency benefits? Do we see continued margin expansion? Or you would think to prioritize in adjacencies, investments that you have been highlighting to us?

I think we would do both. Of course, the current organization and the front end as well as the practices are all geared for the current business and the expanded business into off-highway and commercial. So, we have the organization, we have the focus and we have the clients. So, we will double down on that. Just looking at the future expansion plans we have, we are looking at the adjacencies where either we can leverage our existing clients.

Sushovan · Anand Rathi

Hi. Thanks for the opportunity. So, the question is, if you look at the fixed price project which has significantly increased by 800 basis points from 56.7% to 64.8%. Do you see that? I mean, when we look at some of your peers also who are moving to the fixed price project, we see that it improves the profitability and productivity, but it has an impact on the cash flow.

It is a marginal impact. I do not see anything significant. And once we are in the cycle, I do not see that. There could be some minor impact, but as we said, we will have higher profitability as well.

▸ Prepared remarks (3 blocks)

Good evening, everyone. Very happy to take you through the Quarter 2 results for FY '26. As you might have seen, the overall year-on-year dollar revenue grew <strong>4.4%</strong> and constant currency revenue grew by 0.4%. Quarter-on-quarter growth has been 1.8% in dollar terms and 0.3% in terms of constant currency. In Organic terms, there has been a degrowth of 0.8% in dollar terms and negative 2.3% in constant currency terms. The EBITDA margin stood at 21.1%. To give some color to the growth, I wanted to take some time and explain to you something because there have been some questions about the wins we continue to have. Actually, this has been an issue in the industry also as to why the wins have not reflected in growth. So, I would take a moment to explain that. See, I want to bring that out that there has been a $65 million reduction in the revenue over time for us. And it has two compositions. One is roughly about $45 million, which is basically when the customers deprioritize their spend from the old programs or move to the products or some similar kind of movement of their spend, either because of discontinuing or delaying of certain programs or moving towards using something what they already have. If you really look at this $45 million reduction in the revenue, this includes mainly electrical and middleware. Geography-wise, it has happened mainly in USA, then Asia and a little bit in Europe. So, this has been basically the part where the companies actually reduce their overall spend on engineering. Another roughly $20 million kind of revenue got cannibalized, mainly because we came out with a different solution and provided a more holistic solution to the client. The revenues dropped because we gave a more holistic solution, but our additional revenues due to this will get reflected in the future, because these are mainly AI-based and other solutions and this holistic solution will take some time to materialize. So, overall, we have $65 million which got lost in terms of revenues, which of course has been compensated by the wins from our pipeline.

The second part is about the key point I would like to bring out is, as a company, we believe the client choices are changing, and we want to make sure that we continue to add value and continue to lead the client engagements and have a higher share and maintain our leadership with the clients. So, we have been moving our overall services towards the solutions part. When we talk about solutions, it means that we take a holistic view and give an end-to-end solution to the client and take full ownership. This kind of revenue we have more than doubled in the last year to 18% of our overall revenues. And that has also helped us improve profitability. And that is why we have been able to maintain our profitability. Coming back to profitability, our EBITDA is slightly higher than the last time. It is 21.1%. And we are very confident that what we have talked about, that we will be in a position to maintain 21% EBITDA for the full year. That would be considering the fact that we will be giving increments, some in next quarter and some in the quarter after. So, after giving that, I think we will be in a position to maintain our EBITDA margins at 21% for the whole year. In terms of people, we have a net addition of around 300 people. We see good discussions happening in autonomous, connected after-sales diagnostics, cyber security and commercial vehicles. Europe, of course, continues to see good traction as do India and China. We do believe that in U.S., commercial vehicle segment will have a positive growth. Also, I do believe that the deals which we won during the quarter, which includes a significant deal win from a European OEM, which is a multi-year, multi-domain kind of a win, which is over three years, which will help us to really accelerate certain revenues. We do believe that from the last two quarters, we have a constant currency degrowth. Reported revenue has been growing. We believe that in the Quarter 3, we will be in a position to have a flattish to positive organic constant currency growth and while absorbing the expenses like increments, etc., we will be still around the similar EBITDA margins. In terms of Quarter 4, we do believe that there will be a meaningful growth, which will be coming in.

year-on-year dollar revenue grew <strong>4.4%</strong> and constant currency revenue grew by 0.4%. Quarter-on-quarter growth has been 1.8% in dollar terms and 0.3% in terms of constant currency. The EBITDA margin stood at 21.1%. The other part is about the cash and the DSOs. Our DSOs are 49 days. KPIT DSOs have been at 43 days last quarter. It is 44 days this quarter. The increase in the overall DSO to 49 is on account of Caresoft acquisition where their DSOs are at a higher level. The overall Net Cash is around Rs. 10.5 billion. During the quarter, there has been, as always, Rs. 160 crore plus cash generation, which is pretty strong. However, we had the payouts in terms of Caresoft acquisition, investment into Helm.ai, and of course, the dividend payment.

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Whether the q3 q4 tcv seasonality hedge tightens to a number.