KPIT's European Revenue Falls 16% in Q2; Earnings Seen Steadying in Three Quarters

KPIT Technologies expects the sharp decline in business from two of its largest clients, a European and a Japanese carmaker, to bottom out within two or three quarters, its management said in its Q2 FY27 earnings call.

Revenue for Q2 FY27 rose 1 percent from the previous quarter (in rupee terms) to $176.8 million. Sachin Tikekar, President, put the shortfall from the two accounts, which KPIT did not name, at close to 12 to 13 percent of revenue. European carmakers are battling falling sales and Chinese competition, he said, and further cost-cutting there is likely for a few more quarters.

The pain shows in the regional split. Europe, KPIT's largest region, fell 16.3 percent from a year earlier, and Japan, Korea and China slid 13.8 percent, which Tikekar traced mainly to the same two clients. The US grew 25.9 percent. South-East Asia, India, Middle East and Africa, now reported as a separate region, rose 41.3 percent– still the smallest at about 5 percent of revenue.

Profitability improved on the quarter yet remains below that of a year ago. EBITDA margin rose 60 basis points to 17.8 percent, against 21.1 percent in Q2 FY26. EBIT margin stood at 12.7 percent, down from 16.4 percent.

Kishor Patil, CEO, expects margins to keep climbing each quarter on a richer business mix, product sales, AI-led productivity and better pricing in newer verticals. Anup Sable, CTO, pointed to AI-first projects, where the entire workflow is redesigned, as delivering "almost zero rework" and now being scaled across engagements.

Moreover, KPIT has signed consulting agreements for software-defined machines with two more off-highway clients, following a large programme with a US client reported last quarter, according to Tikekar. Truck demand is showing early signs of recovery in North America, though Europe remains sluggish. Product revenue is targeted to grow around 40 percent this year, led by the Endream in-vehicle gaming platform, diagnostics and after-sales tools, and Technica hardware.

Patil reiterated that the second half would be better than the first. A growing pipeline is converting slowly because European passenger car makers are taking longer to decide, Tikekar added, calling the delay "testing our patience".

Nonetheless, India remains KPIT's fastest-growing region, Patil said, and Tikekar noted that new offerings in energy tech and deep tech will launch there first. Patil expects revenue from both to begin by the end of this year, with meaningful growth in the two years after.