Mobility Solutions Drive KPIT’s Profits

IN 2019, KPIT Technologies restructured its operation, shunning its IT business to turn into a pure-play automotive engineering and mobility solutions company. And since then, it has grown from just over $71 million in revenue (Q4FY19) to $149 million (Q3FY24).

Kishor Patil, co-founder, CEO and MD, recalls a number of decisions taken to align with the new identity and area of work by the company. "We took a bet on the changes in the automotive industry, concentrating on the top 25 OEMs globally," says Patil.

The company currently has nearly 12,000 non-sales, core employees, up from 9,795 in Q3FY23. EBITDA margin has grown from 15.2% in FY21 to 20.6% as of Q3FY24. At the core is architecture consulting and middleware practice (middleware is the software that different applications use to communicate with each other), which brings over 50% of KPIT’s revenue. The company works with global OEMs, including Renault, BMW, Ford and General Motors. With focus on the passenger car segment which forms nearly 40% of the vertical revenue, it has moved from implementing projects to developing an end-to-end architecture for global automakers.

While Europe and the U.S. continue to be KPIT’s largest markets, Asia has emerged a bright spot in the last one year. With western markets cutting down on spends, Asia saw over 40% YoY growth — from $18.1 million in Q3FY23 to $25.7 million in Q3FY24.

Being one of the top five global markets for cars, Patil believes India could provide the critical engineering talent with a lot of customisation already being done by carmakers here. "This (India) is a big enough market, there can be more innovation and we can reduce cost," he says. While the company is bullish on India — it recently inked a deal with an existing client for multiple practices such as engineering and autonomous driving — China remains its key focus. In fact, KPIT has a two-part China strategy. "One is what we can do for OEMs in China. There is value that we can create, whether it’s on the propulsion side or some of the other things. And secondly, for Chinese OEMs who have global aspirations, how can we help because the standards are different in every country," says Sachin Tikekar , president and joint MD, during the company’s latest earnings call.

KPIT has also made critical acquisitions in the recent times. In May 2022, it acquired U.K.-headquartered Somit Solutions for £7.68 million to augment its Cloud-based offering. In 2023, it turned its tie-up with the German-based ZF group into a separate subsidiary, QORIX, a full-stack automotive middleware company with over 300 employees in Germany and India. In November 2023 the company forayed into car gaming by acquiring a 13% stake in Switzerland-based N-Dream for €3 million.

In December 2023, KPIT introduced its Sodium (Na)-ion battery technology as an alternative to the more prevalent lithium-ion batteries in EVs, with a focus on the two-wheeler and three-wheelers segments along with commercial vehicles. The company also expects these batteries to be used as UPS back-ups and grid storage, and for deployment in marine and defence sectors. "Currently, we have a fuel cell offering, we work on integration of hydrogen fuel cells and multiple other areas," says Patil.