Why Did KPIT Technologies Shares Crash Today?
KPIT Technologies shares plunged after the company warned that Q1 FY27 revenue could decline for the first time in 23 quarters. Weak demand from European automakers and lower margin expectations weighed on investor sentiment.
KPIT Technologies Share Price: On 1 July, KPIT Technologies shares plunged 16% after the company warned that Q1 FY27 revenue could decline for the first time in 23 quarters. Weak demand from European automotive customers and lower margin expectations weighed heavily on investor sentiment.
KPIT Technologies shares came under heavy selling pressure on Wednesday after the company issued an unexpected business update that signalled a weak start to FY27.
The stock fell 16% as of 10 AM, touching its lowest level since 19 September 2022. It also recorded its biggest single-day decline in more than six years, the sharpest fall since 18 March 2020. At the time of writing, the stock is trading nearly 70% below its all-time high and has lost around 50% over the last six months.
As of 1 July, 11.20 AM
Why KPIT Technologies Shares FallingToday?
The biggest reason behind the sell-off was the company's weak Q1 FY27 outlook.
KPIT expects Q1 FY27 revenue of $176.2 million, which implies a 4.7% quarterly decline and around a 1% year-on-year fall. The guidance is also 2.3% below analysts' expectations of $180.4 million.
If this happens, it will mark KPIT's first quarterly revenue decline in 23 quarters, ending a growth streak that had lasted nearly six years.
Why KPIT Growth Slowed?
According to the company, several European automotive manufacturers have slowed project execution in recent weeks after issuing their own profit warnings and facing weaker business conditions.
These delays have affected KPIT's revenue visibility for the June quarter.
The company also said Q2 FY27 revenue is expected to remain broadly in line with Q1, suggesting that the slowdown could continue through the first half of FY27.
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KPIT Margins Could Come Under Pressure
The company warned that EBITDA and net profit margins are likely to decline faster than revenue during Q1 FY27.
This is because the company has limited flexibility to reduce costs in the short term while maintaining its engineering workforce.
Earlier, KPIT had guided for an FY27 EBITDA margin of 20.5%–21.2%, but the June quarter is now expected to fall below that level.
Is Management Still Positive on FY27?
Despite the weak first half, management remains optimistic about the longer term.
The company expects business momentum to improve during the second half of FY27, with Q4 likely to see stronger sequential growth. It also said demand for its products and software-defined vehicle (SDV) solutions remains healthy.