KPIT Tech: Q2FY27 revenue to be in similar range as Q1FY27

KPIT Technologies has indicated that its Q2FY27 revenue is expected to remain in a similar range to Q1FY27, following a challenging start to the fiscal year marked by a 1% year-on-year revenue decline. The company attributed the Q1FY27 performance to unexpected actions by European OEMs, including BMW and Volkswagen, which led to a sudden drop in business activity.

Despite the near-term headwinds, management has expressed confidence in a recovery during the second half of FY27, citing strong traction in AI-led solutions. However, the firm cautions that operating profitability, including EBITDA and net profit margins, is expected to decline sequentially in Q2FY27, mirroring the trend observed in Q1FY27. This is primarily due to the inability to adjust fixed costs in the short term, leading to negative operating leverage.

JPMorgan has responded to the revised outlook by downgrading KPIT Technologies to Underweight and reducing its target price to ₹550 from ₹700, citing concerns over margin pressure and a second consecutive year of organic revenue decline. The brokerage also implemented EPS cuts in the range of 9–22% as part of its revised assessment.

KPIT Technologies remains focused on long-term growth, with management emphasizing its strong fundamentals and ongoing investments in AI-led products. The company anticipates that these initiatives will support a more stable margin trajectory.