Prabhudas Lilladher retained its 'Reduce' rating on KPIT Technologies despite the company beating Q2 profit estimates. While truck and off-highway segments showed growth, analysts remain cautious about the passenger vehicle business, which is facing delays from European carmakers.
KPIT Technologies delivered a second-quarter financial performance that exceeded market expectations, yet analysts at Prabhudas Lilladher continue to maintain a cautious stance. The brokerage has kept its 'Reduce' rating on the stock, while slightly raising its price target to ₹520 per share.
The company’s recent quarterly report showed EBIT margins reaching 12.7%, outperforming the 11.7% forecast that analysts had previously set. This profitability was supported by strong performance in the truck and off-highway vehicle segments, which saw a 17.6% jump in revenue compared to the previous quarter. The company's product-focused business also showed stability with a 5% increase in sequential growth.
However, this positive news was balanced by ongoing pressures. The passenger vehicle segment, a significant part of the company's business, continues to drag on overall performance. A key concern for the brokerage is the slow pace at which new orders are converting into actual revenue. Management indicated that European carmakers are taking longer to make decisions, and some have deferred next-generation programs from 2028 to the 2029-30 period.
The joint venture, Qorix, also showed a widening loss, rising to ₹156 million from ₹140 million in the previous quarter. This reflects the impact of customer-led project delays, which are common in the current European automotive environment as manufacturers cut costs and rethink their R&D spending.
Looking forward, the company’s management remains optimistic about a stronger performance in the second half of the fiscal year. They have outlined a plan to bring EBITDA margins back to a range of 20-21% by fiscal year 2028. Analysts have modestly upgraded their revenue growth estimates for fiscal 2027 to 0.5%, reversing a previous expectation of a decline.
Investors may track how effectively the company converts its reported $213 million in new deal wins into revenue in the coming quarters. Success will depend on the stability of key accounts and whether passenger vehicle demand shows signs of recovery in major international markets.