KPIT Technologies Profit warning; downgrade to UW

研报英文原文证据摘录

KPIT Technologies Profit warning; downgrade to UW

E Adj. EPS - 28E (Rs) 32.73 29.08 -11.2%

multiple from 21x to 17x and downgrade the stock to UW with a new PT of Rs550 Quarterly Forecasts (FYE Mar)

(from Rs700). Adj. EPS (Rs)

2026A 2027E 2028E

• Profit warning for 1Q. KPITTECH issued a profit warning in which it Q1 6.28 5.51 6.85

highlighted that 1QFY27 revenue and margin performance will be much lower Q2 6.18 5.61 7.17

than its earlier expectations. It expects $ revenues to decline ~1% YY, implying Q3 4.87 5.74 7.33

Q4 5.95 5.93 7.72

a 4% CC QQ decline, on the back of EU OEMs’ sudden actions triggered by FY 23.28 22.78 29.08

their profit margins. We believe this mainly reflects the profit warning earlier

this month from its BMW account as well as issues at Volkswagen (here). Style Exposure

BMW is its largest client, representing ~12% of revenues.

• FY27 to be second successive year of org revenue decline. With 1Q starting

on a weak note and QQ growth not returning until 4Q, as per the company,

FY27 will likely be another year of org revenue decline. With two of its largest

clients, BMW and Honda, cutting spends, we see it as difficult for KPITTECH

to return to DD growth even in FY28/29. Single vertical exposure along with

high client concentration is now turning out to be a headwind for the company.

• Margins to also be under pressure. Due to negative operating leverage,

KPITTECH expects Ebitda and Net profit margins to decline QQ significantly

in 1QFY27 as it is difficult to deploy cost control measures in a short period of

time given the client spending cuts came only in recent weeks.

• Downgrade to UW. We cut revenues by 5-8% and margins by 20-270bps over

FY27-29E, driving 9-22% EPS cuts. We also cut our target PE from 21x to 17x