Summary
KPIT Technologies Limited - Q3 FY26 Earnings Call Summary Friday, January 30, 2026, 6:00 PM IST
Event Participants
Executives 5 Anup Sable (COO), Kishor Patil (CEO & MD), Priya Hardikar (CFO), Sachin Tikekar (President & Joint MD), Sunil Phansalkar (VP & Head IR)
Analysts 10 Ankit Agrawal, Ankur Pant, Bhavik Mehta, Garvit Goyal, Karan Uppal, Nitin Padmanabhan, Rishabh Rathi, Rohan Nagpal, Sameer Dosani, Vimal Jamnadas Gohil
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Revenue (CC) | 1.5% QoQ | Slowdown attributed to reprioritization of spend by OEMs; organic growth was slightly negative at -1%. |
| Revenue (USD) | $165.6 Million* | +3% QoQ; growth primarily driven by Europe and Off-Highway segments. |
| Net Profit (PAT) | ₹153 Crores | Flat QoQ (Excluding ₹46.9 Cr one-time Labor Code impact); steady despite macro headwinds. |
| EBITDA Margin | 20.5%* | +6.8% YoY growth; margins absorbed partial increments and higher R&D investments. |
| TCV (New Wins) | $202 Million | Muted QoQ; reflects year-end budget exhaustion and lack of long-term deal commitment from OEMs. |
| Cash Balance | ₹900 Crores | Net of ₹630 Cr payout for Caresoft and N-Dream acquisitions during the quarter. |
| Fixed Price Mix | 66% | Increased from 59% YoY; reflects a shift toward solution-based delivery and higher ownership. |
*Calculated based on rupee values and growth rates provided.
Geographic & Segment Commentary
- Europe: Remained a growth driver as OEMs move spend from local vendors to Indian partners to optimize supply chains. Management sees positive discussions despite cautious spending, focused on new technology adoption.
- USA: Speed and quality are the primary focuses as US OEMs face delays in vehicle production programs. High warranty costs are driving demand for KPIT’s AI-based triaging and validation solutions.
- Asia: Performance was impacted by a large program ramp-down in Japan and macro-economic shrinkage in the Japanese market. China remains a strategic win area with a new Chinese OEM added this quarter.
- Off-Highway & Commercial: This segment continues to show strong traction, bolstered by the Caresoft acquisition. Strategic focus is on vehicle cost reduction through mechanical and software integration.
Company-Specific & Strategic Commentary
- Pivot to Solutions: Transitioning from a services-led to a solutions-led model to drive 50-60% reusability and higher revenue per employee. Management expects the majority of the business to shift to this model within 12-18 months.
- AI Integration: Launched AI-infused solutions for “triaging” (identifying software defects across 20+ vendors), significantly reducing vehicle launch timelines. Signed a partnership with Microsoft as a frontier technology partner.
- Acquisition Synergy: Integrated Caresoft to offer “benchmarking as a service,” helping OEMs reduce physical and software product costs. N-Dream gaming platform is now in 2 million vehicles, expected to reach 3 million by next year.
- Leadership Reorganization: Appointed Anup Sable as COO to lead the solutions transformation; added senior leadership in AI, architecture, and complex sales domains.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Q4 FY26 Growth | Highest Growth Quarter | Management expects Q4 to be the strongest quarter of the fiscal year in terms of organic growth. |
| FY27 Revenue | Higher than FY26 | Directional outlook suggests growth acceleration in the next fiscal based on the “solutions” pivot. |
| Profitability | Improving | Q4 margins expected to improve from Q3 levels despite ongoing R&D and AI investments. |
Risks & Constraints
| Risk | Context |
|---|---|
| Regulatory/Labor Code | The new labor code impact (₹46.9 Cr post-tax) creates a higher ongoing base for employee costs. |
| Macro/Geopolitical | Uncertainty in US/EU trade deals and tariffs is causing some OEMs, particularly in Japan, to pause or delay R&D spends. |
| OEM Spend Volatility | Overall passenger car R&D budgets have shrunk 20-25% as OEMs prioritize survival and profitability over aggressive new hardware programs. |
Q&A Highlights
Solutions Strategy & Cannibalization
- Question: Will the shift to solutions cannibalize existing revenue? (Karan Uppal)
- Answer: While specific services might be cannibalized, the holistic approach allows KPIT to capture a much larger wallet share and higher margins. The goal is to solve broader problems cheaper and faster for the client (Sachin Tikekar).
AI and Revenue per Employee
- Question: What metrics should investors track for the pivot? (Vimal Gohil)
- Answer: Revenue per employee will become the primary metric as the company moves away from a pure headcount-led model. Detailed KPIs will be shared by the end of FY26 (Sachin Tikekar).
Japan & Asia Decline
- Question: Why is Asia/Japan declining and when will it bottom? (Rohan Nagpal)
- Answer: A large program with a major Japanese OEM (Honda) reached a natural milestone while new programs were delayed due to the economy. Growth is expected to return by mid-FY27 as new India/China wins scale (Kishor Patil/Sachin Tikekar).
AI Confidence
- Question: Why will AI solutions succeed now when past “product” attempts failed? (Bhavik Mehta)
- Answer: Unlike past attempts, these solutions are already piloted and vetted by clients to solve critical bottlenecks like bottlenecked triaging in production programs. KPIT is taking full delivery responsibility rather than just providing a tool (Anup Sable/Kishor Patil).
Key Takeaway
KPIT Technologies reported a transitional Q3 FY26, characterized by a deliberate pivot from a services-led to a solutions-led model. Financial performance saw a modest 1.5% constant currency growth, impacted by a one-time ₹46.9 crore labor code cost and a broader 20-25% shrinkage in global passenger car R&D spends. Strategically, the company is doubling down on AI-integrated solutions and high-reusability platforms to improve revenue per employee and time-to-market for OEMs. Despite sector-wide headwinds and a decline in the Japanese business, management remains confident in gaining wallet share through specialization in SDV, digital cockpits, and cyber security. KPIT expects Q4 FY26 to be its strongest growth quarter of the year and anticipates FY27 growth to surpass FY26 levels as the solutions strategy matures. Management continues to focus on profitable growth while absorbing heavy investments in AI and strategic talent.
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