KPIT Technologies warns of a weak Q1; JPMorgan downgrades stock, cuts price target
KPIT said the slowdown emerged only in the last few weeks of the quarter and was not factored into its earlier expectations.
- Jul 1, 2026,
- Updated Jul 1, 2026 8:54 AM IST
Shares of KPIT Technologies are in focus today after the automotive-based software major said that its financial performance for the June quarter (Q1FY27) will be weaker than previously anticipated after an unexpected slowdown in business from several European automakers. Despite the near-term setback, the company remains optimistic about delivering sustainable and profitable growth in the second half of FY27.
Subsequently, JPMorgan downgraded the stock to underweight call and cut its target price to Rs 550/share from Rs 700/share on KPIT Tech. The brokerage said the firm has issued a profit warning for Q1FY27, expects Q1 revenue and margin to miss earlier guidance. The firm said weakness would be driven by European OEM spending cuts which reflect issues at BMW & Volkswagen.
The engineering and mobility technology firm expects its reported revenue in US dollar terms to decline by around 1% year-on-year during the June quarter. According to the company, the weakness stems from sudden spending cuts by certain European original equipment manufacturers (OEMs), which followed their recent profit warnings and a more cautious business outlook.
KPIT said the slowdown emerged only in the last few weeks of the quarter and was not factored into its earlier expectations.
The company also expects profitability to come under pressure. Both EBITDA margin and net profit margin are likely to fall sequentially, with the impact on earnings expected to be greater than the decline in revenue. KPIT explained that the abrupt nature of the slowdown left little room to implement cost optimisation measures during the quarter.
While acknowledging the challenging start to FY27, the company believes the current disruption is temporary. It said the ongoing cost-cutting measures by global automakers are likely to accelerate long-term trends such as outsourcing, offshoring and automation, creating fresh opportunities for technology partners like KPIT. The company noted that similar patterns were seen during previous industry downturns, including the COVID-19 pandemic.
KPIT also highlighted that several parts of its business continue to perform well. It is witnessing steady momentum in its products and solutions portfolio, the trucks and off-highway vehicle segment, and key markets such as the United States, South Korea and India.
In addition, the company said its passenger vehicle business continues to benefit from new client wins. Demand remains healthy across strategic technology areas including autonomous driving, connected vehicles, after-sales software solutions and full vehicle engineering. KPIT added that these businesses are supported by a strong order book and an expanding deal pipeline, reinforcing its confidence in stronger growth during the second half of the financial year.
In the previous session, KPIT Technologies shares slipped 5.76% to Rs 671.45 against the previous close of Rs 712.50. A total of 3.18 lakh shares of the firm changed hands amounting to a turnover of Rs 21.73 crore. Market cap of KPIT Technologies fell to Rs 18,407 crore today.
KPIT Technologies Limited is a technology company, which is focused on automobile engineering and mobility solutions. The company offers electronic and mechanical engineering solutions to its customers. It also analyses data for diagnostics, maintenance and tracking of assets and related connectivity solutions, including data and analytics beyond embedded or mechanical engineering and their connectivity and integration with back-end information technology (IT) systems and platforms for the automobile and mobility sector.
Shares of KPIT Technologies are in focus today after the automotive-based software major said that its financial performance for the June quarter (Q1FY27) will be weaker than previously anticipated after an unexpected slowdown in business from several European automakers. Despite the near-term setback, the company remains optimistic about delivering sustainable and profitable growth in the second half of FY27.
Subsequently, JPMorgan downgraded the stock to underweight call and cut its target price to Rs 550/share from Rs 700/share on KPIT Tech. The brokerage said the firm has issued a profit warning for Q1FY27, expects Q1 revenue and margin to miss earlier guidance. The firm said weakness would be driven by European OEM spending cuts which reflect issues at BMW & Volkswagen.
The engineering and mobility technology firm expects its reported revenue in US dollar terms to decline by around 1% year-on-year during the June quarter. According to the company, the weakness stems from sudden spending cuts by certain European original equipment manufacturers (OEMs), which followed their recent profit warnings and a more cautious business outlook.
KPIT said the slowdown emerged only in the last few weeks of the quarter and was not factored into its earlier expectations.
The company also expects profitability to come under pressure. Both EBITDA margin and net profit margin are likely to fall sequentially, with the impact on earnings expected to be greater than the decline in revenue. KPIT explained that the abrupt nature of the slowdown left little room to implement cost optimisation measures during the quarter.
While acknowledging the challenging start to FY27, the company believes the current disruption is temporary. It said the ongoing cost-cutting measures by global automakers are likely to accelerate long-term trends such as outsourcing, offshoring and automation, creating fresh opportunities for technology partners like KPIT. The company noted that similar patterns were seen during previous industry downturns, including the COVID-19 pandemic.
KPIT also highlighted that several parts of its business continue to perform well. It is witnessing steady momentum in its products and solutions portfolio, the trucks and off-highway vehicle segment, and key markets such as the United States, South Korea and India.
In addition, the company said its passenger vehicle business continues to benefit from new client wins. Demand remains healthy across strategic technology areas including autonomous driving, connected vehicles, after-sales software solutions and full vehicle engineering. KPIT added that these businesses are supported by a strong order book and an expanding deal pipeline, reinforcing its confidence in stronger growth during the second half of the financial year.
In the previous session, KPIT Technologies shares slipped 5.76% to Rs 671.45 against the previous close of Rs 712.50. A total of 3.18 lakh shares of the firm changed hands amounting to a turnover of Rs 21.73 crore. Market cap of KPIT Technologies fell to Rs 18,407 crore today.
KPIT Technologies Limited is a technology company, which is focused on automobile engineering and mobility solutions. The company offers electronic and mechanical engineering solutions to its customers. It also analyses data for diagnostics, maintenance and tracking of assets and related connectivity solutions, including data and analytics beyond embedded or mechanical engineering and their connectivity and integration with back-end information technology (IT) systems and platforms for the automobile and mobility sector.