KPIT stock slips 6% after mid-quarter update; should you buy, hold or sell?

Business Standard

24-06-2025

KPIT Technologies share price today
Shares of KPIT Technologies slipped 6 per cent to ₹1,310.45 on the BSE in Tuesday's intra-day trade after the company in its mid-quarter update said that the overall business environment continues to be uncertain with rising geopolitical concerns and ambiguity around the overall tariff scenario.
In the past four trading days, the stock price of the computer software & consulting company has dipped 8 per cent. It had hit a 52-week low of ₹1,020.60 on April 7, 2025.
At 11:23 AM; KPIT was trading 5 per cent lower at ₹1,318.75 on the BSE. In comparison, the BSE Sensex was trading higher by 1.2 per cent at 82,848. The average trading volumes at the counter jumped nearly two-fold, with a combined 3.2 million shares changing hands on the NSE and BSE.
KPIT mid-quarter update
KPIT in its mid-quarter update said the 100 per cent acquisition of Caresoft's Global Engineering Solutions business, approved by the board on May 6, 2025, was expected to close by the end of the current quarter. Revenue from the acquired business is expected to be consolidated from Q2FY26, contributing an estimated 4 per cent growth in FY26 over FY25.
Additionally, the company expects increased offshoring to help optimise costs but has guided for the absence of one-time gains in Q1FY26 and a potential dip in other income due to forex volatility. Early but strategic wins have emerged in the Trucks and Off-highway segment, though some are partially cannibalising existing revenues due to clients' limited budgets. The deal pipeline remains strong, however, conversions and ramp-ups are slower than anticipated, especially in the US and Asia, while Europe shows relatively stronger momentum.
'For KPIT, the pipeline continues to be strong, though the conversions are much slower than expected. Substantial pipeline however is moving in a positive direction. In geographic, Europe is looking positive. USA /Asia are a bit uncertain. The ramp-ups for the wins are progressing at an even slower pace than what was anticipated at the end of the last quarter,' the company said. Track LIVE Stock Market Updates
ICICI Securities view on KPIT post mid-quarter update
KPIT's acquisition of Caresoft's Global Engineering Solutions business is a strategically aligned move that enhances its presence in the Trucks and Off-highway segment while strengthening its manufacturing engineering capabilities and supporting its entry into the China market. While the consolidation is expected to contribute around 4 per cent growth in FY26, the overall outlook remains tempered by macro uncertainties, including geopolitical risks and tariff-related ambiguity, ICICI Securities said in a note.
According to the brokerage view, the slower pace of deal conversions and ramp-ups (in the US and Asia), alongside some revenue cannibalisation from budget-constrained clients, could weigh on near-term performance. That said, continued offshoring and steady traction in Europe may offer some cushion, it added.
JM Financial Institutional Securities view on KPIT
KPIT did not provide any guidance for growth or margin for FY26. It cited difficulty in determining the pace of deal to revenue conversion as reason for the same. Though it did mention that some of these deals are already in the transition phase, suggesting imminent pick-up once clarity emerges.
Management indicated that while the macro environment remains fluid, the medium-term growth drivers are intact. They expect broad-based growth across geographies, with Europe anticipated a rebound as trade dynamics stabilize over the next few months. KPIT emphasized that transformation and large program ramps are expected to meaningfully contribute from H2 FY26. Margin stability remains a priority, with focus on AI-led productivity improvements, cost-effective delivery models, and platform-based engagement approaches.
Analysts at JM Financial Institutional Securities post Q4 results, lowered FY26 cc growth estimate by 300bps. However a 500bps favourable cross-currency swing (based on current FX) results in higher USD estimates, limiting changes to EPS. KPIT's order backlog and execution should help it navigate the current macro, the brokerage firm said in the result update.