Medium-Term Revenue Growth Can Be Approx 20% Ex-Global Disruption: KPIT Tech | CNBC TV18

Summary

KPIT Technologies is making headlines with its robust growth despite a lack of formal guidance. CEO Mr. Kashor Patil highlights that while the company is dealing with market uncertainty, particularly in the U.S., KPIT is progressing with strong deals, including significant engagements in China and Europe. The company is strategically building a presence in China due to its importance in the automotive market, and plans to reinstate guidance once there's more market clarity. For now, KPIT anticipates medium-term growth of around 20%, contingent on stable global conditions.

Highlights

• KPIT is focused on leveraging current deals and partnerships despite lacking official guidance. 🔍
• CEO Kashor Patil expects a 20% growth in medium-term without global disruptions. 🌟
• China and Europe are key markets for KPIT's strategic growth plans. 🇨🇳🇪🇺
• The company is optimistic about overcoming US market uncertainties within a few months. 🇺🇸
• KPIT plans to reinvest in AI and technological solutions to maintain growth and margins. 🤖

Key Takeaways

• KPIT Technologies is experiencing strong growth despite market uncertainties. 🚀
• The company is not providing formal guidance but expects a 20% growth in stable conditions. 📈
• KPIT is strategically focusing on China and Europe for expansion. 🌍
• Despite global disruptions, the partnership with Mercedes and other engagements continue. 🤝
• Mr. Kashor Patil, CEO, assures a strong comeback in the second half if conditions stabilize. 💪

Overview

KPIT Technologies finds itself in the spotlight with impressive results and an optimistic outlook, even without providing formal guidance. The company has managed significant deal wins and revenue growth, although the global market, especially the U.S., presents challenges. CEO Khushroo Patil hints at a promising 20% medium-term growth rate, assuming a stabilization of current global uncertainties.

The company’s strategy is clear: build a significant presence in China and continue strengthening its foothold in Europe. China, being a massive and innovative automotive market, presents strategic opportunities for KPIT. The partnerships and engagements, such as the one with Mercedes, are progressing well, ensuring that KPIT remains a strong contender in the automotive software industry.

Even with the prevailing market disruptions, KPIT is confident in reinvesting to boost its technological capabilities, particularly in AI, while maintaining consistent margins. The company is eyeing a robust recovery in the latter half of the fiscal year, emphasizing its resilience and adaptability in navigating through global disruptions. The future looks bright for KPIT as it continues to tap into new markets and leverage existing alliances.

Chapters

• 00:00 - 00:30: Introduction and Company Focus The chapter introduces KPIT Technologies, an IT company, highlighting its impressive numbers, including deal winds, revenue growth, and margins. However, the lack of future guidance is noted as a concern. The chapter features a conversation with Mr. Kashor Patil, co-founder, managing director, and CEO of KPIT Technologies, discussing the absence of guidance despite having orders and visibility.
• 00:30 - 01:00: Current Progress and Market Conditions The chapter discusses the rarity and current possession of certain items or deals in the industry, highlighting how unusual it is to have them ready in hand, especially in the current market conditions. The text implies optimism for future developments and questions the possibility of new programs following the success of winning large program SDBs.
• 01:00 - 01:30: Quarterly Overview and Challenges The chapter titled 'Quarterly Overview and Challenges' introduces the key activities and partnerships MBRDI has engaged in over the quarter. The chapter highlights the progress made by the organization and discusses the expanding project pipeline. It also delves into the uncertainty of the market conditions during the second quarter, where the market was noted to be soft.
• 01:30 - 02:00: Revenue Growth Projections without Disruptions In the chapter titled 'Revenue Growth Projections without Disruptions,' the speaker provides an analysis of the company's progress across different quarters. With quarter three as a starting point, they mention a significant improvement in visibility and understanding of the business environment. The speaker highlights that there is now clarity about customer needs and the company is prepared to address these. As they near the end of quarter four in March, the speaker feels more confident about their grasp on engagement strategies and pipeline management. Overall, they emphasize a good progress made in terms of revenue growth projections, indicating optimism about the future without disruptions.
• 02:00 - 02:30: Medium-term Revenue Growth Expectations The chapter discusses the current business situation in the US, describing it as an interruption rather than a complete halt, with activities occurring in specific areas. It suggests that the situation will stabilize in one or two quarters. The narrative highlights ongoing larger engagements, noting that some have already commenced and are in the transitioning phase, although full-scale efforts are yet to begin.
• 02:30 - 03:00: Impact of Global Disruptions on Company Growth The chapter discusses the impact of global disruptions on company growth. It highlights the uncertainties faced by companies and the challenges in providing guidance during such times. The conversation suggests that a clearer understanding of the situation in the next three to four months might allow companies to reinstate guidance. People are curious if this guidance will predict at least a 10% growth for the fiscal year 2026, but the speaker is hesitant to commit to specific numbers at this time.
• 03:00 - 03:30: Focus on Chinese Market Development The chapter titled 'Focus on Chinese Market Development' discusses the company's ambitious goals for growth within the Chinese market. The speaker expresses confidence in achieving significant growth rates of 18 to 20% in the medium-term, despite current interruptions. The company aims to strategically calibrate its plans to overcome these challenges and maximize market development in China.
• 03:30 - 04:00: Global OEM Production Plans and Challenges The chapter discusses the impacts of tariff uncertainty on global OEM production plans. The speaker implies that without such uncertainties, they would confidently project an 18-20% growth in the second half of the year, despite a softer first half. The uncertainty significantly influences their production and growth expectations.
• 04:00 - 04:30: Anticipated Impact on Deal Flow and Revenues The chapter discusses the anticipated impact on deal flow and revenues for KPIT tech, focusing on whether a 20% growth rate is sustainable. The dialogue examines the medium-term expectations amidst global disruptions, confirming confidence in achieving this growth level based on past performance.
• 04:30 - 05:00: European Market Outlook and Margin Goals The chapter discusses the European market outlook and margin goals, emphasizing a sustainable 20% growth for the company despite coming from a high base growth of 35-40%. The narrative suggests that there is no significant disruption on the ground, with ongoing progress in their partnership with Mercedes and potential upcoming success in China.
• 05:00 - 05:30: Future Challenges and Strategic Investments The chapter titled 'Future Challenges and Strategic Investments' explores the impact of decision-making on program ramp-ups, with a focus on strategic operations in China. The discussion hints at gaining more clarity by July, following the closure of a 90-day deal window, which will influence further actions. The chapter initiates by addressing expectations on additional revenue from Chinese Original Equipment Manufacturers (OEMs). The speaker emphasizes the strategic importance of China in their operations.
• 05:30 - 06:00: Maintaining Margin and Growth Optimism The chapter highlights the market strategy of focusing on the largest automotive market, emphasizing its innovation. It discusses the need for building a robust organization and maintaining patience as it is a long-term commitment. There is a focus on understanding technologies and collaborating with global Original Equipment Manufacturers (OEMs) to integrate efficient features into their offerings.
• 06:00 - 06:30: Conclusion and Analyst Commentary This chapter discusses the strategic initiatives and future directions for the company's engagement with global Original Equipment Manufacturers (OEMs) in China, and Chinese companies looking to expand internationally. The focus is on building competitive features and forming alliances and partnerships. The outlook is medium-term but emphasizes the concrete progress made in organizational development.

Medium-Term Revenue Growth Can Be Approx 20% Ex-Global Disruption: KPIT Tech | CNBC TV18 Transcription

• 00:00 - 00:30 Well, another IT company we are KPIT technologies is in focus. Now with KPIT the numbers are very good uh dealwinds are good. I mean revenue growth margins but the bummer if I can call it that is that there is no guidance. So let's welcome in Mr. Kashor Patil co-founder managing director and CEO at KP Tech. Mr. Patil, good morning. Thank you for your time. Prashant this side. Why no guidance sir? You have enough orders on hand. You have visibility but no guidance. Why is that? I think we should start with celebrating
• 00:30 - 01:00 something which already have in hand which is rare in the industry right now. No rare good way into the next year. So that is that is the number one part. Yeah. The second is I'll answer your question but just to give you know if you look at deals have been very good and if you see that uh there were certain questions earlier about we have won these large program SDB is that over are there going to be new programs etc.
• 01:00 - 01:30 So we have uh you know MBRDI we have also the partnership which we uh have announced uh during the quarter. So the point is uh we are making a good progress uh overall and we are also you know uh increasing the pipeline. Uh the the the two uh in the quarter two we said that the market is a bit uncertain soft is what I said in the analyst and other
• 01:30 - 02:00 calls also. Uh in the quarter three we said that we are moving from there and we are seeing a better visibility things are happening. We know exactly what they want and what need to address and we are ready for that on the quarter four end now that the March end I feel we have a better understanding not only that now engagement and also the pipeline to do that I think uh if I may say that so there is a good progress which
• 02:00 - 02:30 is happening um what is happening in the US is kind of a interruption um and the dust should settle down in quarter or two. It is not a full it's not like a zero one. It's happening in pockets. Things are happening. But some of these larger engagements beans which we are having already we have started working in some cases. In some cases we have started transitioning but the big scale up is I
• 02:30 - 03:00 think will happen once this uncertainty we should go in next three to four months and I think that will give us uh that uh that could be a good time for come back with a guidance right in three to four in three to four months so it's possible you reinstate a guidance once you have this some more clarity coming through but at this stage as you look ahead will we see a at least a 10% growth for the for F5 526. Yeah, I know that you want to put me a number but
• 03:00 - 03:30 I mean at least at least I mean you know that's and that could be lower number as well but gives us some sense. No, I think let me tell you it is not that uh we we we are a pretty ambitious company and we have a certain goals and I have always said that uh if you look at I mean I I am very confident that if we go to medium-term if this inter interruption was not there we would have been anywhere between 18 20%. uh so I think that's what we are calibrating due to inter interruption so this for this
• 03:30 - 04:00 year this uh first half of course is something which is going to be a softer one for this reason but I feel we we should be in a position to come back reasonably well at the in the second half so so Mr. partil just to understand that what you what you said is that if there was no tariff uncertainty then you would have been reasonably confident of doing at least 18 to 20% growth right which is ballpark
• 04:00 - 04:30 what you did in FI25 so should we take that as a sustainable run rate and this is not a question only for Q1 or Q2 but is 20% growth a sustainable run rate for KPIT tech x of global disruptions you know like like what we are witnessing right now absolutely and that's what we have been saying that uh okay you medium-term we have been saying that that's what we can generate it got it and if you look at class I mean we have done that I think this is at at a high level I need to I would say absolutely absolutely any
• 04:30 - 05:00 number right now no no absolutely sir just trying to understand because from a you know higher base of almost 35 40% growth now you're saying 20% is very sustainable uh for the company now let's talk about the the current disruption because from what you're saying it seems that everything has not stalled on ground uh your partnership with Mercedes is progressing. I think you've also indicated that you could be looking at more wins in China. So to what extent can uh so can you give us some more color? Have companies deferred uh you
• 05:00 - 05:30 know uh decisions will program rampups be uh say impacted? What exactly is happening on ground? Because I I think we'll have more clarity in July once this you know deal window 90-day deal window is open uh is shut. But exactly what's going on and how much more additional revenue are you hoping to get from the Chinese OEMs? Chinese OEM. So let me first address China and then I will come to your second question. So China is a more strategic for me. I mean for our
• 05:30 - 06:00 business because it's a largest market in automotive. It's a very innovative market. So we want to build an organization there. I mean we'll we'll have revenues this that but we'll be patient. It's a long-term commitment we are making needing to build it. But at the same time we see clear opportunities uh for us to engage with them uh whether it is first for uh understanding technology and taking it to our global OEMs how efficient it is because they want to bring some of those features in
• 06:00 - 06:30 their cars etc. The second is for our global OEMs who are in China to build a competitive features for China market. And third is some of these Chinese companies who want to go outside China. what we can help them. So I think there are two three ways and that's what we are focusing on. It is going to be a little long long haul for us. I would say at least a medium-term but we are making very concrete progress in building alliances, partnership, engagement and building our own organization uh uh to begin with and of
• 06:30 - 07:00 course very importantly first priority learning from China. So that what we are doing for the first part. Coming to your second point right now the way it is is globally most of the OEMs have the production program in next year or year after. So two two and a half years most I mean even if they delay a little bit due to this some of these changes it's between 2 years to 3 years they have most of two to two and a half years their production programs are coming out most of them are horribly late they are
• 07:00 - 07:30 not sure about ch they are facing some quality issues and etc. uh I think in that case uh that's where you as you know KPI as independent software integrator we have built platform we have built technology we have tools and what we have done is we have built a very very compelling story for them in terms of AI plus platforms plus our knowledge what we have and that is what we will be in a position to take I was
• 07:30 - 08:00 uh uh sir so please my my apologies for interrupting is just because we are so hardressed interest in time. I completely understand that. I mean the solutions and the tools that the company's already built and the relationships. My question was more direct for the here and now. I mean do you do you anticipate uh a disruption in deal flow or in revenues in Q1 and Q2 till this settles? I don't think so. I mean if you really look at OEMs because they are in a hurry. They have to deliver. The point I was trying to say
• 08:00 - 08:30 is they have to deliver the programs and they have to deliver in a different way. That's what they have to realize. So actually all those actions discussions are happening right now. So it it is a question of a a bit of a time. So the only point if you ask me also we are doing very well on the offway commercial part also. The only place where probably if you may ask is there is certainty will remain for some time and which is a very very small part of our business is tier one business. So I think that's that's what I would. All right. Hi Mr.
• 08:30 - 09:00 Battle good morning and good to hear your thoughts. you know your order book is quite good uh the potential for business is very good the only problem was you're not giving us the guidance but as you said in the next few months hopefully be here on that front I wanted to focus on Europe Europe you know you doing at a run rate ballpark of around 75 odd then it went to around 80 and it continued to grow but in the past quarter there's been a bit of softness out there it came down to around $77 odd million dollars odd uh what's the outlook out here what is the run rate you should be looking at from the
• 09:00 - 09:30 European business and also the other positive has in the margins. I recall Mr. Partle over the years you started at around mid- teens, it went to high teens and now you're clocking 21%. Say in the next few years, where do you see this margin number headed? And in the near future as well, should we be counting on a 50 to 100 basis point increase in margins on a year-to-year basis? I think uh I will ask I will answer the first question. I think first uh our goal is to see how we can help our
• 09:30 - 10:00 clients which are in a real pain. uh and I think this uh the large pipeline we have which we have mentioned is uh uh the highest pipeline we have in our pipeline is from Europe it is across uh the geographies but uh the highest is from Europe uh so I think that is something which will come back I don't think uh when we are already engaged some of those projects have started transitioning is happening so that will happen and you have seen some of the announcements so it I I don't see a big
• 10:00 - 10:30 issue on that part on the margin side. I think we have worked very hard on this part and we believe the our current strategy would be to maintain uh the profitability as you know that most of the OEMs uh most of the service providers or technology companies globally have margin dilution during uh this quarter and last year. uh we we have maintained that but we believe that in the next year our goal is uh to really reinvest into uh some of
• 10:30 - 11:00 this problem solution fast accelerate that uh and AI transformation. So we will be making more investment in this area. So I'm right now I I'm not sure whether we will be in a position to increase the margins from here. But you can sustain at 21% for sure right that confidence you have. Yeah, that's what we and in the next few years we'll obviously look at improving from this 21% odd mark once growth comes back once there are finalization of more deals.
• 11:00 - 11:30 We'll see when where we are and we have to see where the currencies are and then we can take the view. Nobody in the world knows what happens tomorrow. So yeah indeed indeed Mr. B, we appreciate you joining in. I recall many quarters ago you told us that 20% is possible and then 21%. Congrats on that front. The globe is a little bit uncertain, but you're giving a hint of optimism in the commentary that maybe things improve from here on. Appreciate you joining in and giving us all of those details. Nigel, you know, the analyst at JP Morgan, Ankur Udra, says that if KPIT
• 11:30 - 12:00 were to do 10% growth in F526, so 10 how how uh how difficult is 10% in this environment? there's only the third company if in their coverage universe which will do 10% if KPI does uh 10%. So I think that's essentially what Mr. Partle was talking about as well that uh he began by saying I mean you should in this environment uh the way they're doing actually has been uh very very good but of course I mean environment over the next three four months maybe clarity then the guidance is restated we'll see we'll find out uh as we heard
• 12:00 - 12:30 from the company well