KPIT Technologies reported a 21.2% sequential decline in net profit to ₹133.30 crore for the December quarter. The company attributed this decline to a one-time expense related to the new labour code and wage hikes implemented during the quarter. The new wage code negatively impacted profitability by ₹59.71 crore.
However, KPIT’s revenue grew by 1.9% quarter-on-quarter to ₹1,617 crore, revenue in constant currency remaining flat at $181 million. The EBITDA margin for Q3 FY26 was 20.6% after absorbing partial wage increases during the quarter, compared to 21.1% in the previous quarter. Further wage hikes are expected in Q4 FY26.
Future Growth Outlook
The company is facing challenges this fiscal year, as engineering and R&D spending cuts by customers continue, with budgets frozen in many traditional areas. Nonetheless, a recovery is anticipated, with FY27 expected to outperform FY26, according to Sachin Tikekar, co-founder and joint managing director of KPIT.
Tikekar said that automotive companies are facing challenges from new entrants and technological disruptions. While there were 20 OEMs in a 90 million-unit market, that number has now risen to 100 OEMs, maintaining the same market size and exerting pressure on all players.
“The auto engineering and R&D spending has drastically declined since 2024, continuing into 2025, with clients cutting budgets by approximately 24-25%. Apart from chip makers and cloud companies, all other players have been impacted,” Tikekar said.
The company is also focusing more on the Indian and Chinese markets, which continue to show growth. They plan to develop India-specific and China-specific solutions, Tikekar said.
AI Solution Integration
Anup Sable, recently appointed as chief operating officer of KPIT, stated that the company is offering new solutions to customers by leveraging AI in both vehicle manufacturing processes and in vehicle applications. KPIT’s autonomous AI solutions are now being implemented in areas where automotive companies are investing.
This includes digital cockpit technology, cybersecurity, navigation, diagnostics, and after-sales services. Sable also mentioned that KPIT is providing new AI-infused solutions that help customers reduce costs and expedite time-to-market.
Additionally, the company is increasingly transitioning to fixed-price projects, which are growing as a proportion of revenue, facilitating the penetration of AI-infused solutions. They are also entering new adjacent markets such as micro-mobility and defence.
Following the results announcement, KPIT’s stock fell by 5.7% to ₹1,042.80 on the BSE on Thursday.