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- 24 Jun 2025
- ICICIdirect Research
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KPIT IN ITS MID QUARTER UPDATE HAS ANNOUNCED THAT ITS 100% ACQUISITION OF CARESOFT’S GLOBAL ENGINEERING SOLUTIONS BUSINESS
News: KPIT in its mid quarter update has announced that its 100% acquisition of Caresoft’s Global Engineering Solutions business, approved by the board on May 6, 2025, is expected to close by the end of the current quarter. Revenue from the acquired business is expected to be consolidated from Q2FY26, contributing an estimated 4% growth in FY26 over FY25. Additionally, the company expects increased offshoring to help optimise costs but has guided for the absence of one-time gains in Q1FY26 and a potential dip in other income due to forex volatility. Early but strategic wins have emerged in the Trucks and Off-highway segment, though some are partially cannibalising existing revenues due to clients’ limited budgets. The deal pipeline remains strong, however, conversions and ramp-ups are slower than anticipated, especially in the US and Asia, while Europe shows relatively stronger momentum.
View: KPIT's acquisition of Caresoft’s Global Engineering Solutions business is a strategically aligned move that enhances its presence in the Trucks and Off-highway segment while strengthening its manufacturing engineering capabilities and supporting its entry into the China market. While the consolidation is expected to contribute around 4% growth in FY26, the overall outlook remains tempered by macro uncertainties, including geopolitical risks and tariff-related ambiguity. In our view, the slower pace of deal conversions and ramp-ups (in US and Asia), alongside some revenue cannibalisation from budget-constrained clients, could weigh on near-term performance. That said, continued offshoring and steady traction in Europe may offer some cushion.
Impact: Neutral