KPIT Q3FY26 results: Net profit plunges 29% to ₹133 cr, revenue up 9.5%

KPIT's Q3FY26 profit fell sharply due to labour code provisions, even as revenue rose on Europe recovery and growth in connected and autonomous vehicle services

Mid-tier IT services company KPIT reported a 29 per cent drop in net profit for the third quarter to ₹133 crore, from ₹187 crore a year earlier. The plunge in profit was mainly due to provisions of ₹60 crore made for the new labour code. Without that, profit went down 3.5 per cent.

 

Revenue from operations rose about 9.5 per cent to ₹1,617 crore, helped by growth in connected, autonomous commercial vehicles and the European market, which is showing signs of turning around after a long stretch of lull.

 

The electrification business, the biggest, continued to remain sluggish, with a growth rate of 1.3 per cent, while the cloud-based connected services business was up 29 per cent.

 

“The macro continues to play havoc for original equipment manufacturers (OEMs), with tariffs and supply chain issues putting pressure on them,” said Sachin Tikekar, co-founder and joint managing director. “OEM spends have gone down. Except for cloud players and chip makers, all revenue and profit are down. We are holding on to our bottom line to a large extent but are also facing competition from disruptors,” he added.

 

For KPIT, that will be a cause of worry because its sequential revenue growth has slowed significantly over the last five quarters. On a dollar basis, the growth was just 0.2 per cent.

 

Kishor Patil, co-founder, chief executive officer and managing director, said as the industry accelerates towards software-defined vehicles, KPIT’s focus on next-generation technologies, AI-driven solutions, and deep client partnerships will position it to lead this transformation.

 

KPIT expects its AI bets and focus on China and India to contribute to revenue from the next fiscal. During the third quarter, it won deals worth $202 million.

 

The company, which operates in the engineering research and development (ER&D) space, expects new vehicle programmes in existing partnerships, the addition of new logos, expansion into new geographic markets, mobility adjacencies such as off-highway, and solutions on cost reduction and cybersecurity to propel medium-term growth.

 

Europe has become a go-to geography for Indian ER&D players as automakers in the region take cognisance of competition from Chinese rivals who have flooded the market with cheaper but more advanced-technology cars. The geography grew 12.3 per cent to $93 million. Business from its US operations was up 4.6 per cent year-on-year to about $48 million.

 

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 last year.

 

The sector, which includes automotive, semiconductors, industrials, energy and utilities, telecom, healthcare and life sciences, and consumer electronics, has been one of the fastest-growing in India’s technology industry, with 7 per cent year-on-year growth. The largest IT industry, in comparison, has been growing at about 4 per cent due to a weak macroeconomic environment, which has impacted client spends.

 

EBIT margin fell to 15.6 per cent from 17.2 per cent a year earlier. Headcount dropped to 12,724 during the second quarter from 12,879 sequentially.