KPIT Tech stock crashes 16%, hits lower circuits after FY27 warning, block deal adds to pressure

Shares of KPIT Technologies Ltd hit a series of lower circuits on Wednesday, falling more than 16 percent after the automotive software company issued a profit warning for the April-June quarter and signalled that weak business conditions could persist into the September quarter.

At the end of the trading session, KPIT Technologies shares were at Rs 561, down 16.5 percent, making them the top loser on the BSE Midcap index. The stock has declined more than 55 percent over the past one year, compared with a 6 percent fall in the Nifty 50.

The company said it expects revenue in the second quarter of FY27 to remain in a similar range as the first quarter, indicating that the near-term weakness is likely to persist.

Separately, around 62.61 lakh shares, or 2.24 percent of the company's equity, changed hands through block deals at an average price of Rs 375 per share. The transactions were valued at about Rs 362.4 crore.

Following the company's update, JPMorgan downgraded KPIT Technologies to 'Underweight' from 'Neutral' and cut its target price to Rs 550 per share from Rs 700.

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The brokerage said it now expects KPIT's first-quarter revenue and margins to miss its earlier guidance. It forecasts dollar revenue to decline 1 percent year-on-year and 4 percent quarter-on-quarter in constant currency terms, reflecting weaker spending by European automotive original equipment manufacturers (OEMs).

According to JPMorgan, the weakness is primarily driven by spending cuts at BMW and Volkswagen, with BMW contributing about 12 percent of KPIT's revenue.

The brokerage also expects a sharp decline in EBITDA and net profit margins in the June quarter, noting that cost reductions would be difficult to implement in the short term.

Looking ahead, JPMorgan expects the first half of FY27 to remain weak, with sequential growth likely only in the fourth quarter. It also warned that FY27 could become the second consecutive year of organic revenue decline for the company.

Reflecting the weaker outlook, the brokerage cut its FY27-FY29 revenue estimates by 5-8 percent, reduced EBITDA margin estimates by 20-270 basis points, lowered earnings per share estimates by 9-22 percent, and trimmed its target price-to-earnings multiple to 17 times from 21 times.