KPIT Tech, LTTS, Tata Elxsi, Tata Technologies: What's spooking ERD services stocks?
KPIT Technologies shares fell 7.19 per cent to hit a low of Rs 890.10 today. LTTS was down 3.22 per cent at Rs 3,713.10. Tata Elxsi Ltd plunged 5.02 per cent to Rs 4,985.50.
- Feb 12, 2026,
- Updated Feb 12, 2026 4:31 PM IST
Shares of KPIT Technologies Ltd, L and T Technology Services Ltd (LTTS), Tata Elxsi Ltd and Tata Technologies, among other pure-play ERD services companies, plunged up to 7 per cent in Thursday’s trade amid a broader selloff in IT stocks, driven by concerns over AI-led disruptions. The stocks were also in focus as analysts believed there was limited respite from demand challenges in the near term.
Automotive vertical-focused companies’ outlook remains contingent on client-specific engagements, as R&D investment priorities shift with changing demand patterns, said Kotak Institutional Equities in a note.
"Valuations have derated across companies—justified, in our view. We maintain our cautious stance awaiting signs of meaningful demand recovery," it said.
KPIT Technologies shares fell 7.19 per cent to hit a low of Rs 890.10 today. LTTS was down 3.22 per cent at Rs 3,713.10. Tata Elxsi Ltd plunged 5.02 per cent to Rs 4,985.50. Tata Technologies Ltd fell 1.82 per cent to Rs 616.50.
In its Q3 review note, Kotak said earnings revisions were moderate for Cyient (DET), LTTS and Tata Technologies. It said sharper downgrades were seen at KPIT Tech due to weak demand, ramp-downs in large engagements and continued material hedge losses in the upcoming quarters. The earnings cut was modest at LTTS, despite a sharper cut in revenues, it said.
KPIT Tech has plummeted 23.35 per cent in 2026 so far. LTTS is down 15.47 per cent during the same period. Tata Elxsi and Tata tech declined 4.5 per cent each.
"Continued demand challenges in automotive and limited improvement in client spending elsewhere are likely to impact FY2027E revenue growth. Some valuation derating in this context is justified by elevated levels, though the further downside is likely in the near term in the absence of meaningful demand drivers," it said.
FY26 started off on a cautious note with weak demand and macro uncertainties. Automotive and medical devices were among the more impacted industries. Demand recovery in the automotive vertical is likely to be patchy and volatile and contingent on the spends of select OEMs, Kotak said.
"The aerospace demand remains healthy for aftermarket services, aiding performance for Cyient (DET), TTL and LTTS. LTTS lowered FY2026E growth outlook to mid-single digits (including 600 bps inorganic contribution). We expect all ERD companies to report a revenue decline in FY2026E organically," it said.
Weak demand and clients’ focus on driving R&D efficiencies impacted profitability across companies, despite meaningful currency tailwinds, Kotak said.
Shares of KPIT Technologies Ltd, L and T Technology Services Ltd (LTTS), Tata Elxsi Ltd and Tata Technologies, among other pure-play ERD services companies, plunged up to 7 per cent in Thursday’s trade amid a broader selloff in IT stocks, driven by concerns over AI-led disruptions. The stocks were also in focus as analysts believed there was limited respite from demand challenges in the near term.
Automotive vertical-focused companies’ outlook remains contingent on client-specific engagements, as R&D investment priorities shift with changing demand patterns, said Kotak Institutional Equities in a note.
"Valuations have derated across companies—justified, in our view. We maintain our cautious stance awaiting signs of meaningful demand recovery," it said.
KPIT Technologies shares fell 7.19 per cent to hit a low of Rs 890.10 today. LTTS was down 3.22 per cent at Rs 3,713.10. Tata Elxsi Ltd plunged 5.02 per cent to Rs 4,985.50. Tata Technologies Ltd fell 1.82 per cent to Rs 616.50.
In its Q3 review note, Kotak said earnings revisions were moderate for Cyient (DET), LTTS and Tata Technologies. It said sharper downgrades were seen at KPIT Tech due to weak demand, ramp-downs in large engagements and continued material hedge losses in the upcoming quarters. The earnings cut was modest at LTTS, despite a sharper cut in revenues, it said.
KPIT Tech has plummeted 23.35 per cent in 2026 so far. LTTS is down 15.47 per cent during the same period. Tata Elxsi and Tata tech declined 4.5 per cent each.
"Continued demand challenges in automotive and limited improvement in client spending elsewhere are likely to impact FY2027E revenue growth. Some valuation derating in this context is justified by elevated levels, though the further downside is likely in the near term in the absence of meaningful demand drivers," it said.
FY26 started off on a cautious note with weak demand and macro uncertainties. Automotive and medical devices were among the more impacted industries. Demand recovery in the automotive vertical is likely to be patchy and volatile and contingent on the spends of select OEMs, Kotak said.
"The aerospace demand remains healthy for aftermarket services, aiding performance for Cyient (DET), TTL and LTTS. LTTS lowered FY2026E growth outlook to mid-single digits (including 600 bps inorganic contribution). We expect all ERD companies to report a revenue decline in FY2026E organically," it said.
Weak demand and clients’ focus on driving R&D efficiencies impacted profitability across companies, despite meaningful currency tailwinds, Kotak said.