KPIT Tech Q2 Results: Stock jumps 5% after Co says on track for margin expansion, losses to narrow

Shares of KPIT Technologies Ltd. gained as much as 5% on Wednesday, October 28, in response to their September quarter results, that were subdued on a sequential basis, but were higher than the previous quarter.

For the September quarter, KPIT Tech reported a 35 basis points expansion in its EBIT margin to 11.65%, from 11.3% in the previous quarter. Earnings Before Interest and Tax went up by 4.2% sequentially to ₹197 crore.

In its investor presentation, KPIT Tech highlighted that the margin expansion was largely driven by operations efficiency and revenue mix and that the company is on track for margin expansion in the near-term, aided by revenue mix, growth, and AI-led productivity gains.

Net profit for the quarter increased by 4.3% sequentially to ₹121 crore. The quarter also includes a forex loss of ₹17.1 crore, which is higher than the loss of ₹16.3 crore in the previous quarter. The management expects this to reduce from the ongoing quarter.

The share of losses from Qorix, the joint venture with the ZF group, stood at ₹15.6 crore in the September quarter, wider than the ₹14 crore loss reported in June, led by revenue delays. The management expects this loss to narrow from the ongoing quarter as well.

During the quarter, KPIT Tech's top two accounts decline stood at 13% on a year-on-year basis, which was offset by growth across off-highway, trucks and passenger vehicle clients.

"We expect the decline in these two accounts to bottom out over the next couple of quarters," Sachin Tikekar, the Co-Founder and Joint MD at KPIT Tech said. "We have seen a marked improvement in our pipeline, supported by growing traction in US and India," he added.

Kishor Patil, the co-founder, MD & CEO at KPIT Tech said that the company is witnessing broadening opportunities across passenger vehicles, off-highway and truck segments.

Shares of KPIT Tech gained as much as 5% after the results announcement on Wednesday and are now trading 3.6% higher at ₹551. The stock has more than halved in value this year, declining 52% so far.