KPIT Technologies Shares Plunge 15% After Weak Outlook and Block Deals, Hit Lower Circuit

Mumbai, July 1: KPIT Technologies share price slumped 15% on Wednesday, hitting the lower circuit after the automotive software and engineering company flagged a weaker-than-expected outlook for the June quarter and warned that demand challenges could persist into the September quarter.
 

The sharp decline came after the company said it expects a sequential fall in both dollar revenue and operating profit in the first quarter of FY27, citing “sudden actions” by certain European original equipment manufacturers (OEMs). Separately, the stock came under additional pressure after block deals involving 2.24% of the company’s equity were executed at an average price of ₹375 per share, with the transactions collectively valued at around ₹362.4 crore. 

JPMorgan Turns Bearish 

The weak guidance prompted JPMorgan to downgrade the stock to “Underweight” from “Neutral”, while cutting its target price to ₹550 from ₹700, implying limited upside from current levels. 

Stock resumed trade after hitting lower circuit. Source: NSE  

The brokerage said KPIT’s outlook suggests a much weaker operating environment than previously anticipated. It expects the company to report a 1% year-on-year and 4% sequential decline in constant-currency revenue for the June quarter, alongside weaker profitability as lower utilisation and limited scope for cost reductions weigh on margins. 

European Automakers Behind Slowdown 

KPIT attributed the slowdown to abrupt decisions by several European OEMs following their recent profit warnings and weaker business outlook. The company said these actions have affected project spending, leading to lower revenue expectations for the June quarter.

JPMorgan believes the weakness is largely concentrated among German automakers, particularly BMW and Volkswagen, which have become more cautious on discretionary technology spending amid a challenging demand environment in Europe. 

BMW is estimated to account for roughly 12% of KPIT’s revenue, making it one of the company’s largest customers. Any reduction in engineering programmes by the automaker could therefore have a meaningful impact on KPIT’s financial performance. 

Muted Growth Outlook 

Beyond the June quarter, the company also indicated that revenue in the September quarter is likely to remain broadly in line with the June period, suggesting that the slowdown may persist through the first half of FY27 before demand begins to recover. 

The guidance marks a sharp shift from earlier expectations of a gradual recovery in spending by global automotive clients and has raised concerns that project deferrals could continue for longer than anticipated. 

Brokerage Slashes Estimates 

Reflecting the weaker outlook, JPMorgan cut its FY27-FY29 revenue estimates by 5-8%, reduced EBITDA margin forecasts by up to 270 basis points, and lowered earnings-per-share estimates by 9-22%.
The brokerage also reduced its valuation multiple to 17 times forward earnings from 21 times, citing slower growth prospects and rising uncertainty around customer spending. 

JPMorgan downgrade underscores growing concerns that Europe’s automotive slowdown is beginning to weigh more heavily on Indian engineering technology companies with significant exposure to the region. 

Source: https://www.nseindia.com/get-quote/equity/KPITTECH/KPIT-Technologies-Limited