Shares hit lower circuit with 19.77 lakh shares in sell queue after JM Financial cut target to ₹620. European OEM spending cuts pressure Q1 margins; KPIT sees H2 recovery.
Alpha Score of 64 reflects moderate overall profile with strong momentum, strong value, weak quality, moderate sentiment.
Shares of KPIT Technologies crashed 10% to hit the lower circuit at ₹604.40 on the NSE Wednesday. The sell queue stacked up nearly 19.77 lakh shares with zero buy orders visible, a complete freeze on the buy side. Market capitalisation dropped to about ₹16,569 crore. The stock is now at a 52-week low, down 51% over the past year and 48% year-to-date.
The trigger came late Tuesday. KPIT told the exchanges it expects Q1FY27 USD revenue to decline about 1 percent year-over-year. European automotive OEMs cut spending abruptly after their own profit warnings. Management said the impact was not anticipated and surfaced only in recent weeks. The shortfall is concentrated in certain European clients.
The damage goes beyond revenue. EBITDA margins and net profit margins will drop sequentially in Q1, and at a steeper rate than revenue, the company said. There is limited room for cost cuts on such short notice. That margin compression erodes the earnings power that investors had been paying for.
Analysts moved quickly. JM Financial downgraded the stock to REDUCE with a target price of ₹620. The firm cut its FY28-29 earnings estimates by 12-13% and trimmed the valuation multiple to 20x from 24x. SBI Securities called the development a near-term negative for KPIT and for peers LTTS and Tata Elxsi.
KPIT tried to frame the longer view. The company said business fundamentals remain intact. It pointed to traction in trucks, off-highway vehicles, and markets including the US, Korea, and India. Management expects a recovery in the second half of FY27 and sequential growth through Q4FY27 as the base for FY28.
The stock has now lost more than half its value in a year. That price action suggests skepticism about the FY28 path. A single quarter of margin erosion raises questions about the structure of KPIT's revenue base. If European OEM spending stays weak, the implied recovery looks optimistic. The next data point will be Q1 results due in late July.
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