KPITTECHNSEFebruary 4, 2025

KPIT Technologies Limited

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Management on call

Kishor Patil

CO-FOUNDER, CHIEF EXECUTIVE

Sachin Tikekar

PRESIDENT AND JOINT

Anup Sable

CHIEF TECHNOLOGY OFFICER AND

Priya Hardikar

CHIEF FINANCIAL OFFICER – KPIT TECHNOLOGIES LIMITED

Sunil Phansalkar

VICE PRESIDENT OF CF&G,

Rahul Jain

DOLAT CAPITAL MARKETS LIMITED

Key numbers — 26 extracted

18%

in and reiterate our guidance for the revenue we had given at the beginning of the year between 18% to 22%. We have raised our EBITDA outlook from 20.5% + to 21% +, and that is reflected also in th

22%

reiterate our guidance for the revenue we had given at the beginning of the year between 18% to 22%. We have raised our EBITDA outlook from 20.5% + to 21% +, and that is reflected also in the EBITD

20.5%

had given at the beginning of the year between 18% to 22%. We have raised our EBITDA outlook from 20.5% + to 21% +, and that is reflected also in the EBITDA margin for this quarter. Overall year-to-d

21%

t the beginning of the year between 18% to 22%. We have raised our EBITDA outlook from 20.5% + to 21% +, and that is reflected also in the EBITDA margin for this quarter. Overall year-to-date quart

20.7%

ed also in the EBITDA margin for this quarter. Overall year-to-date quarter 3 FY '25 revenue grew 20.7% over the last year Q3 YTD revenue. Similarly, YTD Q3 FY '25 profit growth is 38% over the same

38%

5 revenue grew 20.7% over the last year Q3 YTD revenue. Similarly, YTD Q3 FY '25 profit growth is 38% over the same period last year. For this specific quarter, revenue grew 17.4% CC, 18.1% reporte

17.4%

'25 profit growth is 38% over the same period last year. For this specific quarter, revenue grew 17.4% CC, 18.1% reported USD, year-on-year. EBITDA is 21.1% versus 20.8% last quarter.Year- on-year, t

18.1%

t growth is 38% over the same period last year. For this specific quarter, revenue grew 17.4% CC, 18.1% reported USD, year-on-year. EBITDA is 21.1% versus 20.8% last quarter.Year- on-year, there is a

21.1%

ar. For this specific quarter, revenue grew 17.4% CC, 18.1% reported USD, year-on-year. EBITDA is 21.1% versus 20.8% last quarter.Year- on-year, there is a growth of 20.4% in terms of net profits. Qua

20.8%

specific quarter, revenue grew 17.4% CC, 18.1% reported USD, year-on-year. EBITDA is 21.1% versus 20.8% last quarter.Year- on-year, there is a growth of 20.4% in terms of net profits. Quarter-on-quart

20.4%

d USD, year-on-year. EBITDA is 21.1% versus 20.8% last quarter.Year- on-year, there is a growth of 20.4% in terms of net profits. Quarter-on-quarter, there is a growth of 2% in constant currency and 1.7

ear, there is a growth of 20.4% in terms of net profits. Quarter-on-quarter, there is a growth of 2% in constant currency and 1.7% in reported revenue. Overall, the growth has during this period –la

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Guidance — 20 items

Kishor Patil

opening

“At a high level, first, we maintain and reiterate our guidance for the revenue we had given at the beginning of the year between 18% to 22%.”

Kishor Patil

opening

“Looking forward for the next year, overall, we see very positive conversations with the clients.”

Kishor Patil

opening

“And so we believe that there will be a continued mobility for short-term projects as needed, whether it is H1 or L1 or any other mode, it doesn't matter.”

Kishor Patil

“And if you actually ask me, the largest growth will be driven for us in terms of digital cockpit and autonomous in the next few years.”

Garvit Goyal

“And by when we can expect revenue to start kicking in KPIT's books.”

Garvit Goyal

“Do we expect anything in revenue to contribute in FY '26 in KPIT's books?”

Kishor Patil

“So I may say that it continues to contribute in some way right now, but I'm sure it will be a contributor for the next year.”

Sachin Tikekar

“So net-net, right now, we are very happy to see the progress that we've made in Q3, and we expect the trend to continue in the near future.”

Sachin Tikekar

“And that's something that they will do in the next year.”

Sachin Tikekar

“Going forward, that would be the case, but it would be much beyond that.”

Risks & concerns — 13 flagged

So I was asking that, obviously, we have seen a slowdown in global auto volumes, and obviously, the recovery will take some time.

— Bhavik Mehta

So do you foresee any risk to the existing work which you are doing for Honda, which may impact the growth for FY '26?

— Karan Uppal

But last time, you mentioned that the timing of the deal conversion was a bit uncertain.

— Karan Uppal

One is, I think not only for us but across the industry, I think both US and Europe have been weak.

— Nitin Padmanabhan

But because of the competitive pressure on them, they want to get it done in a quicker way as well as they want reliability.

— Kishor Patil

Since a significant acceleration is coming from the ROW geography, which is relatively lower margin as compared to, say, Europe, how are we looking to offset this margin headwind with the change in mix from geography point of view?

— Pranav

Actually, if you ask me we are getting ready for, if I had to say, pressure on cost to some extent, but we believe we will be in a position to really have benefits because of the investments we are making in AI and automation and the productivity.

— Kishor Patil

And I also see despite a decline in technical headcount, I see an increase in enabling sales personnel.

— Abhishek Kumar

Is this a conscious strategy that we are trying to expand what we offer to offset or a potential slowdown that we are seeing and therefore, investing ahead of the curve so that the revenue trajectory, etcetera, remain a lot more resilient.

— Abhishek Kumar

Does that mean that we are hedging in order to prepare for any kind of slowdown?

— Sachin Tikekar

I meant that we are investing ahead of the curve given some slowdown, etcetera, but we probably see opportunity in adversity, etcetera.

— Abhishek Kumar

Difficult to give a client-specific answer, but as Mr.

— Kishor Patil

And so long as these clients are going to remain in the business, technology flux, whether it is EV or hybrid or this or that really is an opportunity rather than a concern for you.

— Bharat Shah

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Q&A — 13 exchanges

So a couple of questions. Firstly, obviously, we are -- in auto sales, but based on the client conversation, -- being fastest between US and Europe, between the two I know Asia does well. But between US and Europe, where do you see the recovery happening at a faster growth? That's question number one.

Sunil Phansalkar

Bhavik, could you repeat that. We couldn't hear you clearly. Breaking a little bit. Is it better? Yes. Yes. So I was asking that, obviously, we have seen a slowdown in global auto volumes, and obviously, the recovery will take some time. But between US and Europe, where do you see the demand from clients coming back sooner than later based on our client conversations? That's question number one. The second question is as OEMs move from EVs to hybrids or other alternative options, how does that impact the kind of work KPIT does with those OEMs? Do we see any headwinds on our revenues because of

Am I audible sir?

Sunil Phansalkar

Yes. Congrats for a decent set of numbers. My first question is on QORIX. Like we are observing a few developments there happening when we visit your social media platform particularly on the human resource side, like teams of Pune and Bangalore are meeting along with the new hirings happening. So can you put some light on where are we right now? And by when we can expect revenue to start kicking in KPIT's books. So that is my first question. So actually, I may just say that we are quite on track. The team is already in place. And to some extent, we are building this solution for a much broade

The first question is on the potential Honda Nissan merger. So do you foresee any risk to the existing work which you are doing for Honda, which may impact the growth for FY '26? That's the first question.

Sachin Tikekar

So as you know, what is in the press is they are working towards creating an agreement over the next couple of quarters. And all going well, they will create one common entity where the 2 companies will get merged. And that's something that they will do in the next year. Honda is one of most important clients. And for Honda, we are one of the most critical partners in their SDV and beyond SDV journey. We actually look at this as a greater opportunity, not only from the work that we are doing for Honda, many of the things that we are doing for Honda where Honda is leading the way. So we believe

Am I audible?

Sunil Phansalkar

Yes. Yes. So my question would be that we saw market shift happening and there's like OEM s that were looking for cost reduction, right? So I would just -- based on which you already mentioned about that you'll be hitting the lower end of the guidance in top line. So firstly, can you talk about how are things right now with OEMs? Are they like still struggling to maintain their financial performance? And how are we seeing that in -- how it will be reflecting in the top line. So like if you say that you'll be hitting 18% lower end of the guidance. And if I do the math, then for Q4, it might sum

Congrats on the solid deal wins in the quarter. I had a couple of questions. One is, I think not only for us but across the industry, I think both US and Europe have been weak. And our strength in Asia has sort of ensured that we are better off. Just wanted your thoughts on -- from both these geographies, when do you see them sort of returning to growth for us on an overall perspective? That's the first question.

Kishor Patil

So Nitin, as I mentioned, I think the wins we had, I think, they are led by Europe and across verticals. So I think the growth will come back latest by quarter 1, if not quarter 4. I hope it will return by quarter 4. Got it. And I think in the last quarter, we were worried about some pushout of deal execution, and this is what even the other players are suggesting. Do you think that's sort of subsiding? And while the deal closures are actually quite solid, do you think the deal to revenue conversion will be normal? Or do you think that also gets pushed out a bit or it's just normal for us? I m

Just one question on the margin front, considering a significant part of our acceleration is coming from the ROW geography, which is on the lower margin side relatively. How are we looking to offset this change in margins going?

Kishor Patil

I didn't understand your last comment. Since a significant acceleration is coming from the ROW geography, which is relatively lower margin as compared to, say, Europe, how are we looking to offset this margin headwind with the change in mix from geography point of view? So that is, I think, an assumption from your side, actually. Yes. So many times, we do not see any impact on our profitability because of that. Actually, I think we have the same, if not better profitability as compared to the other part. Actually, if you ask me we are getting ready for, if I had to say, pressure on cost to som

Congratulations on good execution in this tough quarter. I have a couple of questions. We have had a very good run in Asia over the last 2 years. Asia revenues seen about two and half times jump. Do you see this geography to stay resilient and not see challenges that European or North American automakers are seeing today?

Sachin Tikekar

Ruchi, so let me answer that question. We do see growth coming from Asia in future as well. And when we look at Asia, we look at Japan, Korea, China, Southeast Asia and India. And also now there are 1 or 2 OEMs that are in the Middle East. So that's really Asia. And we believe that all of these markets, we are likely to see growth. So we remain bullish on Asia. However, I just want to reiterate what I said earlier. What is being reported as growth from Asia, it does have elements of Europe and US because some of the clients that are actually from US and Europe, large execution is happening out

I feel that we have expanded sort of our playbook and correct me if I'm wrong, be it in terms of client base, we talked about 8 clients out of our T25 clients. In terms of offerings, we have spoken about semi-con at length, which we have not spoken earlier, and also in terms of some verticals...

Management

Yes. Is this better?

Kishor Patil

Yes, Abhishek. Yes. So my question was that it appears from outside that we have expanded our playbook, whether it's client base , offerings or sub-verticals. And I also see despite a decline in technical headcount, I see an increase in enabling sales personnel. And we just talked about deploying some consultants for some of the new verticals. So am I reading this right? Is this a conscious strategy that we are trying to expand what we offer to offset or a potential slowdown that we are seeing and therefore, investing ahead of the curve so that the revenue trajectory, etcetera, remain a lot mo

Difficult to give a client-specific answer, but as Mr. Tikekar said, it will be an add-on to us in terms of it's a revenue growth opportunity for us. Chandramouli Muthiah: Got it. Got it. That's helpful. Second bit is, I think for many quarters, your active client count, I don't know how much it matters, but your active client count has been at 60 clients. And I think after a period of 5 or 6 quarters, we've now seen it increase by 3 clients. You also gave some commentary in your prepared remarks that you've been able to sign on some new clients. So I just want to understand what is the nature

Kishor Patil

So it is actually all of it, but let me give a bit of color on this. So there are a few OEMs which we did not engage earlier for both things. I mean, naturally, first, they did not have a clear road map for the SDV as well as the investments marked for it and their direction was, I would say, not consistent with what the solutions we have to offer. But what we have seen is many of those are coming back to us, even the legacy OEMs, at least 3, I can see, if not 4 large ones. And that really brings our engagement with them, which is based on what they want to do and what they see, what KPIT has

Yes. I think this call has come a little late. I had to get off the call to something else. But quickly, what I understood from your narration is that your clients' business challenges apart, the progress on the sales being good or otherwise apart. Fundamentally, we offer a solution and capability which results in a relationship with auto client, which is not transactional, but which is a deeper engagement. And therefore, that gives us ability to grow even when your clients are facing challenges. That was, in some sense, is a meaning I could derive.

Kishor Patil

Absolutely. And to add to that, I mentioned that our share in the client spend still can more than double. So putting what you mentioned and that part, I think we believe that we will be in a position to grow our relations. Bharat, I think you should become our spokesperson. You articulated -- you are spot on. I must appreciate that, the way you captured it. Thank you. Which means, we are not linearly correlated to the business issues and challenges and otherwise facing clients. We are fundamentally problem solver for them. And so long as these clients are going to remain in the business, tech

Congratulations on a good set of numbers. Sir, you mentioned about the pipeline, the growth being there, 20% Y-o-Y. Can I get a broader sense as to how has the pipeline growth grown over the last 3 months, last 6 months? You mentioned a significant growth. Any number over there will be helpful. And also what is the growth here in Europe on a 3-month, 6-month basis? Is the pipeline growing strongly for Europe? Some color on that will be helpful?

Kishor Patil

So we do not mention the pipeline, as I said, it could be misleading. But... Just a Y-o-Y number. Sorry to interrupt, but just a Y-o-Y or Q-or-Q number, not the absolute number. So yes, that's what I'm answering. So actually, I'm saying it is a quarter-on- quarter 20%. growth It is not year-on-year, the increase in the pipeline. And yes, it's a very significant number. It's a 20% increase in the pipeline, and it is led by Europe. So there is a significant increase in the pipeline in Europe as well. Sure, sure. Understood. Correct. Correct. So I'm sure, given the conversations, the kind of conv

So thank you, everyone, for your active participation. And if you have any more queries, please feel free to write to us. Thank you so much, and have a great evening. Bye.

Kishor Patil

Thank you.

Speaking time

Kishor Patil

Moderator

Sachin Tikekar

Sunil Phansalkar

Garvit Goyal

Nitin Padmanabhan

Abhishek Kumar

Bhavik Mehta

Jinesh Shah

Ruchi Mukhija

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Opening remarks

Rahul Jain

Good evening, everyone. On behalf of Dolat Capital, I would like to thank KPIT Technologies Limited for giving us the opportunity to host the earnings call. And now I would like to hand the conference over to Mr. Sunil Phansalkar, who is Vice President of CF&G and Head of IR at KPIT to do the management introductions. Over to you.

Sunil Phansalkar

Thank you, Rahul. Hello all. Good evening, and a warm welcome to the earnings conference call for Q3 FY '25 of KPIT Technologies Limited. I hope all of you have had a great start to the new year and continue to have so for the remainder of the year. On the call today, we have Mr. Kishor Patil, Co-Founder, CEO and MD; Mr. Sachin Tikekar, Co-Founder and Joint MD; Mr. Anup Sable, CTO and Board member; and Mrs. Priya Hardikar, CFO; and Sunil from Investor Relations. As we do always, we'll have the opening remarks by Mr. Kishor Patil on the performance of the company and the way forward, and then we'll have it open for questions. So now I will hand this over to Mr. Kishor Patil.

Kishor Patil

Good evening, everyone. Very happy to take you through the results for quarter ending December '24. At a high level, first, we maintain and reiterate our guidance for the revenue we had given at the beginning of the year between 18% to 22%. We have raised our EBITDA outlook from 20.5% + to 21% +, and that is reflected also in the EBITDA margin for this quarter. Overall year-to-date quarter 3 FY '25 revenue grew 20.7% over the last year Q3 YTD revenue. Similarly, YTD Q3 FY '25 profit growth is 38% over the same period last year. For this specific quarter, revenue grew 17.4% CC, 18.1% reported USD, year-on-year. EBITDA is 21.1% versus 20.8% last quarter.Year- on-year, there is a growth of 20.4% in terms of net profits. Quarter-on-quarter, there is a growth of 2% in constant currency and 1.7% in reported revenue. Overall, the growth has during this period –largely beenis driven by Asia, but we'll explain a little more on this. The overall deal wins have been $236 million during the quarte

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