KPIT Tech Picks Trends That Will Define Auto Industry's Future

KPIT Tech guided that supply side-pressures will continue in FY23 and possibly even further.

The new Software Engineering Centre of KPIT Technologies in Munich. (Source: Company Website)
The new Software Engineering Centre of KPIT Technologies in Munich. (Source: Company Website)

Electrification, software-defined vehicles, and reduction in personal vehicle ownership are some of the key trends that will be defining the auto industry in the future, according to KPIT Technologies Ltd.'s Ravi Pandit.

"We're seeing a reduction in carbon consumption", Pandit, chairman at the mobility software provider, told BloombergQuint's Niraj Shah in an interview. "Almost all major automakers have committed to an all-electric line-up by 2030."

According to Pandit, the percentage of personal ownership of vehicles is going down over the years. "Most of these vehicles are becoming commercial, whether it is cars, SUVs or pick-up trucks."

A commercial car will now have to run an additional number of kilometers, and that, in turn, will require the auto industry to churn out more vehicles. "The auto industry has to work very fast, and the change in pace is visible too."

Apart from secular trends, certain short-term trends such as the impact of Covid-19 where shared mobility took a hit, or chip shortages are also shaping the auto industry, Pandit said.

At a company level, original equipment manufacturers are investing in battery making and charging infrastructure, he said.

"Autonomous vehicles are also coming through, be it commercial or personal." This is giving rise to the trend of software-defined vehicles. "Earlier, there used to be cars with computers. Now, there are computers with cars."

KPIT Tech's revenue rose 5.2% sequentially in the three months ended March in constant currency terms, led by autonomous and connected domains. The company also won a large deal with an European OEM, with a total contract value of 70-million euros.

Key Q4 Highlights (Consolidated, QoQ)

  • Revenue rose 5.2% to Rs 651.8 crore.

  • Profit up 14.6% at Rs 80.6 crore.

  • Ebitda margin at 18.6% vs 18.5%.

Outlook For FY23

  • Constant currency revenue growth in the range of 18% to 21%.

  • Ebitda margin to be in the range of 18% to 19%.

  • Volume growth in the range of 25%.

The company also guided that supply-side pressures will continue in FY23 and possibly further on as well.

"The nature of the workforce has changed. Over the last four years, we are seeing a dip in the number of engineering graduates as well, from about 17 lakh to 11 lakh," Pandit said.

With hybrid and remote work gaining popularity, a centralised working environment is a thing of the past, he said.

"We are looking at decentralised offices, where people can come in a few days of the week, which will lead to higher work efficiency and lower costs for us as well."

Watch the full conversation with Ravi Pandit here: