KPIT Tech down 49% in 2026: Growth recovery from Q3 likely; should you buy stock?

KPIT Technologies Ltd management is confident of a growth recovery from the December quarter (Q3). Nirmal Bang Institutional Equities, which recently hosted an investor conference, said client-specific transitions would remain a near-term drag for the niche IT player and leader in automotive software, mainly due to Honda’s halt of its US EV programme, Renault’s software-defined vehicle (SDV) transition and a temporary investment pause at a key German OEM. However, these issues largely are said to be client-side reprioritisation rather than a loss of wallet share. Growth is likely from the September quarter, Nirmal Bang said.

For now, the brokerage has 'Hold' rating on the stock with a target of Rs 672 apiece. The scrip is down 49 per cent in 2026 so far. There are 10 'Buy' calls, six 'Hold' recommendations and eight 'Sell' calls on the stock, as per data compiled from Bloomberg. The 12-month consenus target for the stock at Rs 642 implied 8.9 per cent potential upside ahead.

Q2-Q4 outlook
Nirmal Bang had hosted Sunil Phansalkar, Head of Investor Relations at KPIT Technologies.

"Growth is expected to recover from Q3 and accelerate in Q4, supported by rampup of recent large deal wins and easing client transitions. Longer-term growth levers include SDM, value engineering, product/platform offerings, and broader client diversification," Nirmal Bang suggested the KPIT Tech management as saying.

The KPIT Tech management expects September quarter (Q2) to remain flat, Q3 to see marginal growth, and March 2027 (Q4) quarter to witness a sharper recovery, supported by ramp-up of recent wins, completion of client transitions, and potential reopening of paused European programs.

Vendor consolidation
KPIT Tech expects vendor consolidation at OEMs could create significant wallet share opportunities. While one German OEM has paused spending, another is reportedly accelerating vendor consolidation and increasing reliance on KPIT to launch programs faster and at lower cost, Nirmal Bang said.

"This indicates that KPIT continues to gain relevance where OEMs are actively pursuing engineering-cost optimization," the domestic brokerage said.

Broad-based growth
Nirmal bang said KPIT is deliberately moving from account concentration to broad-based growth. The company, it said, is shifting from a model reliant on 6–7 large accounts toward 20 major accounts, while diversifying across geographies and
verticals.

"This is effectively a risk-mitigation strategy following the sudden budget pauses witnessed at large OEMs," it said.

OEM engineering budgets are shifting from architecture-led SDV spending toward visible, revenue-linked features. Competitive pressure from Chinese OEMs is pushing legacy OEMs to prioritize digital cockpit, connected vehicles, ADAS/autonomous driving, and after-sales over some longer-duration centralized architecture programs. This shift should benefit KPIT’s near-term engineering opportunity set even if the mix of SDV work changes, Nirmal Bang said.

KPIT Tech shares: Buy, hold or sell?
Nirmal Bang said global slowdown in the automotive sector has impacted KPIT Tech’s performance in the recent past and we believe that revenue and margin pressure will continue, with any material recovery only in FY28.

Globally, OEMs are also under pressure due to supply chain issues and competitive intensity from Chinese OEMs, it said.

"We maintain our HOLD rating on KPIT tech with a target price of Rs 672 valuing it at 24 times FY28E EPS.

Earlier on August 17, Phillip Capital suggested a 'Buy' on the stock with a target of Rs 800. 360 One Capital has 'Hold' on the stock with a target of Rs 580. Kotak Institutional Equities and PL Capital have 'Sell' rating on KPIT Tech with targets of Rs 540 and Rs 460, respectively.