KPIT Q2 profit falls 17% to ₹169 crore on JV losses, revenue up 8%

KPIT Technologies' quarterly profit fell 17% due to joint venture losses, but revenue rose 8% on strong growth in connected and autonomous vehicle segments and improving demand in Europe

Mid-tier IT services company KPIT reported a 17 per cent drop in net profit for the second quarter to Rs 169 crore from Rs 203.7 crore a year earlier. The fall in profit was due to losses of about Rs 23 crore from a joint venture.

 

Revenue from operations rose about 8 per cent to Rs 15,877 million, driven by growth in connected and autonomous commercial vehicles and recovery in the European market, which is showing signs of turning around after a long lull.

 

“The European pipeline is very strong and in the US, we see growth coming back in the commercial vehicles segment,” said Kishor Patil, co-founder, chief executive officer (CEO) and managing director (MD).

 

He added that as the industry accelerates toward software-defined vehicles, KPIT’s focus on next-generation technologies, AI-driven solutions, and deep client partnerships would position it to lead this transformation.

 

How does KPIT view the outlook for the rest of the fiscal year?

 

KPIT expects the second half of the fiscal year and the next year to be better than the first due to a stronger deal pipeline and traction from China and India.

 

The company, which operates in the engineering research and development (ER&D) space, won deals worth $232 million for the quarter ended September 30. New vehicle programmes in existing partnerships, addition of new clients, expansion into new geographic markets, mobility adjacencies such as off-highway, and solutions on cost reduction and cybersecurity are expected to propel medium-term growth.

 

Why is Europe emerging as a key market for Indian ER&D players?

 

Europe has become a key geography for Indian ER&D players as automakers in the region take cognisance of competition from Chinese rivals that have flooded the market with cheaper but more technologically advanced cars.

 

India’s ER&D sector could be worth about $100 billion by the end of this decade, up from $56 billion last fiscal, Patil told Business Standard earlier this year.

 

How is India’s ER&D industry performing compared with IT services?

 

The ER&D sector, which includes automotive, semiconductors, industrials, energy and utilities, telecom, healthcare and life sciences, and consumer electronics, has been one of the fastest-growing segments in India’s technology industry, expanding at 7 per cent year-on-year. By contrast, the larger IT services industry has grown about 4 per cent due to a weak macroeconomic environment that has dampened client spending.

 

How did KPIT perform across markets and segments?

 

KPIT’s business from its US operations rose 4.2 per cent year-on-year to about $50 million, while Europe grew 5.4 per cent to $89 million.

 

Margins also improved 30 basis points from last year, aided by operational efficiency and the depreciation of the rupee.

 

Headcount dropped to 12,879 during the second quarter from 13,087 a year earlier.