Shares of KPIT Technologies plunged 16.97% to Rs 557.50 on the BSE on Wednesday, a day after the company cut its Q1FY27 revenue and profit guidance, citing spending cuts by European automotive OEMs, including Volkswagen and BMW.
The stock, which hit a 52-week low of Rs 555.30, came under further pressure after JP Morgan and JM Financial downgraded it. BMW contributes about 12% of KPIT’s revenue.
European Client Spending
KPIT said its June quarter financial performance will likely be weaker than expected due to a sudden drop in revenue in the last few weeks, led by multiple client actions. Profit warnings and adverse business outlooks from European OEMs triggered a 1% year-on-year decline in dollar revenues and negatively impacted KPIT’s operating profit and margins in April-June.
The company clarified on Wednesday that the revised outlook applies only to Q1FY27, not the full year. It expects Q2 revenue to remain broadly in line with Q1, saying the slowdown at its European customers was too recent to allow for cost optimisation.
The company expects this to be a short-term setback, saying that the fundamentals of its business remains strong. It expects profitable growth in the second half of the fiscal, with sequential quarterly improvement leading to strong growth in Q4FY27.
Brokerage Downgrades
Brokers, however, were unsure. JP Morgan downgraded the stock to ‘underweight’ from ‘neutral’, cutting its target price to Rs 550 from Rs 700. JM Financial also downgraded the stock to ‘reduce’, with a target price of Rs 620.