Despite a 28% year-on-year decline in its second-quarter (Q2) net profit, KPIT Technologies Ltd saw its shares jump 8% in Wednesday's trading. The IT firm reported a net profit of Rs 120.61 crore for the September quarter, yet investor confidence was buoyed by optimistic commentary from the company's management.
Management's Optimistic Outlook
KPIT Tech's Q2 results included a significant forex loss of Rs 17.10 crore, an impact the company expects to lessen from the third quarter onwards. Furthermore, the IT services provider highlighted a 60 basis point expansion in its EBITDA margin during the quarter, attributed primarily to enhanced operational efficiency and a favorable revenue mix.
Looking ahead, KPIT Tech's leadership expressed confidence in achieving further margin expansion in the near term. This growth is anticipated to be driven by a strategic revenue mix, overall business growth, and substantial productivity gains stemming from the adoption of Artificial Intelligence (AI) technologies.
Client Diversification and AI Adoption Drive Growth
Sachin Tikekar, co-founder and Joint MD of KPIT Tech, acknowledged a sharp reduction in business from two of the company's largest clients. However, he noted that robust growth across several other existing and new clients largely offset this impact, enabling the firm to maintain a broadly stable revenue base. Tikekar expects the decline in these key accounts to stabilize over the next two quarters.
Tikekar also highlighted a marked improvement in KPIT's business pipeline, bolstered by increasing traction in the US and India markets. He added that the integration of Caresoft is strengthening the company's capabilities in Vehicle Engineering and Manufacturing Consulting, opening new opportunities. The firm is also accelerating its adoption of AI across engineering, delivery, and internal operations to boost productivity, speed, and competitiveness.
Structural Demand for Software Innovation Remains Strong
Kishor Patil, co-founder, CEO, and MD of KPIT Tech, commented on the broader industry landscape. While some Original Equipment Manufacturers (OEMs) are recalibrating programs due to immediate market pressures, Patil emphasized that the fundamental need for software-led innovation, greater efficiency, and faster time-to-market remains a powerful structural driver for the sector.