KPIT Technologies Ltd (NSE: KPITTECH) Q3 2026 Earnings Call dated Jan. 30, 2026
Corporate Participants:
Rahul Jain
Kishor Patil — Co-founder, Chief Executive Officer and Managing Director
Sachin Tikekar — President and Joint Managing Director
Anup Sable — Chief Technology Officer
Analysts:
Karan Uppal — Analyst
Nitin Padmanabhan — Analyst
Garvik Goel — Analyst
Hirisha Bharati — Analyst
Vimal Jamnadas Gohill — Analyst
Ankit Agarwal — Analyst
Sandeep Shah — Analyst
Bhavik Mehta — Analyst
Vidyadhar Ginde — Analyst
Ankur Pant — Analyst
Karanopal — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to KPIT Technologies Q3FY26 earnings conference call hosted by Daulat Capital. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing STAR and then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Rahul Jain from Daulat Capital. Thank you. And over to you sir.
Rahul Jain
Thank you Sagar. Good evening everyone.
On behalf of Dalut Capital I would like to thank KPIT Technologist for giving us the opportunity to hold this call. And now I would like to hand the conference over to Mr. Sunil Sansalkar who is Vice President CFMG and Head of Investor Relations at KPIT to do the management introductions. Over to you Sunil.
Rahul Jain
Thank you Rahul. Good evening and a very warm welcome to everyone on the Q3FY26 earnings call of KPIT Technologies Limited. Since we are still in the first month of the year I take this opportunity to wish all of you a. Great 2026 and beyond. On the call today we have Kishore Patel, Co Founder, CEO and MD Mr. Chachin, President and Joint MD Anup Sabre Board Member and CEO Priya Hardikar, CFO. And Your Stoley from investor relations. As we always do, we will have the comments about the performance on the quarter and the way forward in the opening and then we will shift into question and answer mode. So once again a very warm welcome to you. And I hand this over to Mr. Peshwar Patan.
Kishor Patil — Co-founder, Chief Executive Officer and Managing Director
Welcome to quarter three earnings call. Today the way I would do is I will go through some of the highlights of the quarter and then I would hand it over to Anup whom you know you are aware he is now the Chief Operating officer. He used to be the CTO before this. So to explain what transformation we are doing in terms of business specifically what we have been talking about, the solutions and there have been many queries about what does it actually mean. So he would like to take couple of examples and explain so that you may get some clarity.
So I think I’ll start with the financials. So quarter FY26 year on year growth will be in terms of rupee 9.4% in terms of $3% quarter 3cc 1.5% EBITDA growth of 6.8% post absorbing increments, partial increments, Organic growth is negative under 1% for the quarter overall in the growth. If you really look at growth was contributed the business which has grown during the quarter in Europe and off highway commercial. That is the business which has grown overall. The net profit excluding the one time labor code impact is 1.53 billion against 1.53 billion last quarter the labor charge we had the charge against the labor code is 469 million post tax.
We also paid the interim dividend during the quarter. The cash is about 9 billion after payment of 6.3 billion against the payouts of Caresoft and Ndream during the quarter. The TCP value during the quarter is 202 million. Largely it is across the geographies Europe the highest followed by USA and also something from China again this year from a Chinese oem. As I have mentioned earlier that we have been. We believe that the business is changing. The OEMs are changing. Their challenges are different. So overall the overall business will change overall for the industry in coming years.
While we continue to grow our existing way existing business. And we do see. We have a. We do see those opportunities. We would like to move forward and make change the business ahead of time. And that’s why we are moving to the solutions based transformation now. There a couple of indications there. The fixed price Our revenue is 66% against 59% last year per person revenue is up. We have continued the investment in this business which is more than 3.8 million during the quarter. This does not include the AI investments we are making especially in addition to this.
Plus this does not make include the investments which we have made earlier in certain acquisitions like Technica or the recent acquisitions like. So while we are here I would like to mention that overall the way we look at forward we see many positives out of this quarter and last six months. The first thing is the focus on AI and we. We are. We have two projects or wins which are in a area which we are working on in the production. In the production programs we are using. The second thing is we announced our also on AI.
We announced the partnership with Microsoft and which is actually. Microsoft also made an announcement in terms of recognizing APIT as a Frontier partner of technology. Similarly, another leading CRM company has. Also. Sign an agreement for our Agentix solutions on that platform. In terms of micro mobility we have done a partnership with Hero Group HNC High. That was the recent announcement we did about a month back. We do believe that we see that overall commercial and off highway we continue to see traction which is based on the back of AIRSOFT acquisition and our other offerings. In terms of geographies overall we see positive discussions in usa, positive discussion in Europe, positive discussion of course in India, China, Middle east and Southeast Asia and in certain pockets of Japan and Korea.
In order to really manage this transformation as well as the readiness for growth in future, we have added a lot of leadership. The first one of course I mentioned to you, Anoop is now designated as a Chief Operating Officer and key managerial person. Anup has been with the company for 31 years and has played multiple roles. We also have added multiple technology leaders in AI also in certain domains, architecture etc. Also we have promoted some internal people in terms of these positions in addition to hiring from outside in the jios. Also some of the practice teams we have at a senior level we have had from the industry.
In view of our movement towards solution based business and readiness on the JIO side we have continued to add people again from the purpose that the people can really handle the complex cells both in case of AI as well as the solution and we will continue to do that. This is where we are and I would now request Anup to really take few examples about the solution.
Anup Sable — Chief Technology Officer
Thank you Kushab. Hello everybody. Good evening. I would first like to sort of demystify what is a solution because many terminologies or definitions of solution could exist. You can imagine something like an iPhone is actually a product. That means you can literally pull it out of a box and with a minimum configuration. That means if you have an older iPhone you can scan a barcode and eventually the new iPhone can get configured to your all contact, et cetera, information that is there and you can start using it literally within 10 minutes of buying it. That’s a product usually sort of the most important attribute is it’s mostly shrink wrap has a little bit of configuration to be done.
Like we spoke in terms of iPhone when we talk about a solution. Large. Part of the work that is required to be done for a solution is already ready with somebody like us. But there is some part of the work that has to be customized based on the customer’s requirement. And these requirements could be different. These requirements could be more and less in certain cases of customers, these requirements could actually address certain internal complexity in terms of customer setup and the customer’s product. And hence there is a definite amount of work in terms of software development in terms of validation that needs to be done to make the solution ready for the customer.
I will give you two examples of what we mean by solution. So when we talk about let’s say something that is pre AI as a solution is there is an advanced feature inside the car now where you can use the phone as a key. Now technically, from a user’s perspective, sorry, before technical. From a user perspective, what it means that you can use the phone and not have a key with you. The car detects the phone at a particular distance, unlocks the car. Car also detects that the phone is inside the car and the door is locked and then allows the vehicle to go in an ignition ready state.
So you can switch on the ignition and then start driving the car. And similarly, when you get out of the car, it can switch off. You move away from the car, it lost the car. Now there are different technologies technically required and it’s a very complex system in terms of implementation. So you have multiple technologies like Bluetooth, ultra wideband, Wi Fi, 5G all involved. Then you have channels challenges inside the car in terms of how many different computers does this particular system interact in terms of making the use cases work. And of course when you actually develop something like this, you need to make sure that you have integration with Apple, iPhone, But it also then works with Android phones and then it works in Android specifically with Samsung and then Smart specifically with other Android phones that are there.
So all of this large part of it is testable, reusable, but a significant part of it is customized to what the OEM would like to have. And for this KPIT as a solution, which is a combination of the test platform and then the number of test cases that are required for certain certification requirements, there is a consortium called CCC Heat Consortium that certifies the solution for this. So all this is ready. So when we go to the customer we can actually present a full pleasure readiness in terms of getting the customer to a stage where a new phone or a new vehicle launch can be supported.
Now, what is the advantage? There are a couple of advantages that happen because of this. One is things are more or less ready. That means the time required for this particular activity is less. Second, because you have done this for multiple instances, there is already a domain know how that is captured inside, which gives an advantage both in terms of quality and again in terms of time. And of course the overall cost for the customer is lower because most of the things are ready. And as a result the profitability for KPIT would also be higher.
This is one example of a solution. Now I would take another example of a fully AI based solution because in every solution you can always have certain amount of AI to improve the efficiency, improve the Performance, But I’m talking about a fully AI based solution. Now for this I will give you an example of how software development happens, especially in large teams. So when you want to develop a software, say for example, what you see inside your vehicle for a digital cockpit, which is a combination of your central touchscreen, the cluster, the colorful cluster that you have, and then certain lighting that is inside, ambient lighting that is there inside the car.
Now, when you write the software for such a thing, the software is a combination of written software by OEM, written software by the tier one, and then the various third party suppliers, sometimes as good as 20 different suppliers, for example, Apple CarPlay, Android, Auto comes from Google. So all these systems have to be combined together and validated. And when the software development is complete and the integration starts happening, there are a large number of bugs or issues that come out, which are integration issues. Now, when you look at a complex system, significantly large software, the most critical operation that happens very close to the software or the vehicle getting launched is fixing all of these issues.
And sometimes these issues could be in numbers of thousands, if not hundreds, right? So the most bottleneck operation in such a case becomes who actually decides where the problem originated from. Because the software has been written by 20 different players, it is residing on four different computers. So where is the defect originating from and how to go about fixing this problem? This is called a triaging problem. It is a very complex thing because not only you have to deal with complexity, but the number of people who can handle this in terms of understanding what the problem is and where the problem originated are limited.
And hence this operation gets bottlenecked. Now this is a problem that we are solving by triaging as an AI imposed solution. So when we get into the customer, when we have gone into the customer, we have understood what the source code is, we have understood what the architecture of the vehicle is, we have understood what the defect is. And then we have created an AI based engine that allows what this one or two bottleneck resources used to do to immediately be done by the AI and as a result again significantly reduce the time to fix the problem.
Also the duration for which this bottleneck has happened, that also is significantly reduced. And of course at the end the customer gets quality as an output and the vehicle launch happens on time. So I give you two examples, one which is very specific to a complex system, the iPhone case that I talked about, the phone as a key, and the second example I talked about software development life cycle, where we are actually solving a complex bottleneck choked problem using AI AI as the primary engine or toolkit. So there are multiple such solutions that we are going to focus on this year in terms of going behind the customers, these have been validated.
These have been working with the customers in the last few years and we feel confident that now we can actually go to more and more customers and allow them to leverage what we have.
Kishor Patil — Co-founder, Chief Executive Officer and Managing Director
Thank you, Anu. So basically we believe that this is the direction in which the clients are going, where they would like to have a solution ahead of time and can make it available to their customers in a shorter duration and the full ownership is taken so that there are no delays over it, which is from the client side. We do believe that this may take, I mean, large part of our business to convert into this part. It may take between 12 to 18 months. But naturally, specifically AI and some of the few solutions which we believe high potential will start in next three to four months.
So this is what I just wanted to mention today. I think we will be happy to take any questions.
operator
Thank you very much. We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and then one on the Touchstone phone. If you wish to remove yourself from the question queue, you may press Star. And two participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Our first question comes from the line of Karan Uppal from Philip Capitals India. Please go ahead.
Karan Uppal — Analyst
Yeah, thanks for the opportunity. A couple of questions from my side. Firstly, on the pivot to solutions, LED offerings versus lead service LED models which we used to have. So do we expect to gain market share from our peers given our solutions or you expect that could the outsourcing of work increase from OEMs versus the work which they used to do internally? That is part one. And secondly, with this solutions LED model, do you expect any cannibalization of the existing revenue? If yes, if you can quantify, sure.
Sachin Tikekar — President and Joint Managing Director
Yeah. Thanks for the question. This is Sachin Takekar. So let me answer the first part. Obviously the solutions, when you look at solving a client’s problem and Anuk described two of them, what typically happens is in the second example you saw that there is a hardware setup involved, there are tools involved, there is a workflow and then there are many companies that are actually providing different kind of software. So if you have to provide a holistic solution in order to leverage the solution and have the maximum benefit, you have to look at it holistically. So our first effort is to Take a broader view of the problem and provide a comprehensive solution to solve the problem.
Now in this case, what happens is we end up cannibalizing someone else’s business. That means we’ll be able to do it cheaper, better, faster for the client. If you are doing, if there is an existing business, part of the business has been done by kpit, then obviously that part gets cannibalized. But the thing is when we provide the holistic solution, we get a much bigger wallet share. So that’s the model that we are applying across the oem. And the whole purpose is twofold. One is to solve the problem of the OEMs more comprehensively and help them get their vehicles in the production program cheaper, better, faster.
At the same time increase the wallet share for KPIT and also the margins. So yes, the simple answer is yes, this will lead to increase in wallet share. I think that’s the answer to your first question. What was the second question?
Karan Uppal — Analyst
Our revenue as well.
Sachin Tikekar — President and Joint Managing Director
Yeah, I think I answered that to, to some extent and in some cases we do it proactively in the interest of the client. But we always want to solve the bigger question. So we will not just cannibalize our own revenue, we’ll end up cannibalizing something much bigger. So net net, there is a wallet share gain.
Karan Uppal — Analyst
Okay, thanks. Thanks for that. Second, on the geopolitical environment with the new tariffs being announced by US for new nations and new US trade deal in question, how are OEMs reacting to it? Are they comfortable to spend on their new age R and D programs or they may. Again pause before some clarity emerges.
Kishor Patil — Co-founder, Chief Executive Officer and Managing Director
I will talk about European OEMs. If you look at it, they actually are, I think we have been saying that and you must have, that they want to move towards different supply chain in this case. And that’s why basically, even though there may not be a new spend, they are moving their spend from the local vendors to India. So that is certainly a clear trend and that happens. The second thing there they are trying to find out how they can get some new technologies. Some of these solutions, we talked about specific solutions I think that they would like to go for.
So I think the way they are looking at it, they are saving some money. They are investing cautiously in certain areas. Naturally they are not spending all the money, but that is what is happening in the Euro. In USA we believe that the speed is very important because Most of the OEMs in USA have, are delayed on their vehicle programs significantly. And I think that is where they are looking for Solutions and some of the solution as Anup mentioned really reduces time to the production program significantly and at least also with the quality because I think the biggest issue if you have studied, I think most of the US companies they have a higher warranty cost overall and so basically having it better quality and faster is important to them.
But this is in pockets overall. It is also Some specific to OEMs. Some OEMs are not spending and they’re really not strategically taking a view. But few of them are doing it in US and also off highway commercial are at this point of time are positively looking at making a change towards this.
Sachin Tikekar — President and Joint Managing Director
Just to add to Kishore’s point, the macro reading that we have from different OEMs is I think this has been going on for the last one year. They have figured out ways to this may continue for a while. Every day things are changing especially coming from the US and hence I think. Different. Alliances are getting formed. But I think the OEMs have figured out a way that this is going to be a way of life and then they are prioritizing certain technologies and certain investments. At the same time they are deprioritizing many others so that they have enough money to respond to these changes and meet the expectations of their consumers.
Kishor Patil — Co-founder, Chief Executive Officer and Managing Director
There are one or two geographies which seem impacted because of the uncertainty which is Japan basically if you look at their overall market action, most of them were having the good share in US which is under doubt. Many of them were investing into US or Canada or Mexico. Now many of them have kept their plan on hold or that is not helping them. So that’s one region and they are getting impacted to some.
Karan Uppal — Analyst
Okay, thanks. Thanks for the detailed color. This last thing on the tcv Kishore Sir, TCV was a bit muted this quarter. How is the pipeline looking and what’s the Overall outlook for FY27 if you can elaborate. Thanks.
Kishor Patil — Co-founder, Chief Executive Officer and Managing Director
I mean the first thing is, you know during this time I think you get the orders. Nobody is ready to sign a very long term deal most of the time. But they will still have few. But the point is this is the last quarter and it really depends upon the budgets which are remaining with a particular oem. So I would not read too much into it but you know that we give any understanding about next year at around April. But if I give you some understanding I will make only two statement. One is we believe that our last quarter we will improve our growth will be higher as it will be the highest growth in any way.
We did not have much growth but there will be the higher growth in the Q4 that will be the highest growth quarter from this year and our profitability improve will improve from what we have in Q3 in spite of our investment. This is one statement. The second thing is we feel reasonably amen and please take me that field continue to tell you at Q3 but I’m just giving you my feel right now we will for sure grow next year higher than this year and that we believe we will be in a position to do it.
Now some of these transitions which we talked about exactly how much when time difference we are little bit unsure. So we are not putting exact number right now or see what we can do by April. What we can talk about this but this is at a high level color I can give you.
Karan Uppal — Analyst
Okay sir, thanks. Thanks a lot. I’ll call back into the team.
Sachin Tikekar — President and Joint Managing Director
Thank you.
operator
Thank you. The next question comes from the line of Nitin Padmanabhan from Investec India. Please go ahead.
Nitin Padmanabhan — Analyst
Yeah hi, good evening, wishing you all a very happy new year. Had a couple of questions. So one is see on the solutioning I think when we listed in 2019 we actually at that time spoke about maybe having pre built 15 to 35% or 40% of whatever customer seeks to build and that’s tested to be error free code and thereby we accelerate for clients. I think this is more or less similar but I think you’re doubling down. So if you could give some context on what that doubling down is. And the second is a more conceptual question is that considering that we are able to sort of up the ante on this and maybe pre build a lot more, shouldn’t it mean.
And basically at lower cost. Right. Time to market is shorter, shouldn’t it mean that your deal velocity should be higher? Right. Logically because market share gains would reflect in higher deal velocity. So just wanted your thoughts there. And do you think that is something that we should start seeing soon or that will sort of evolve over a period of time how should we sort of think about this broadly? And lastly if you could just give some sense in terms of let’s say if you look at U.S. europe and maybe Japan broadly, how are conversations or spends from our perspective? Maybe within the top three or four customers within each of those geographies.
Is it just some color that you could give qualitatively would be very helpful.
Kishor Patil — Co-founder, Chief Executive Officer and Managing Director
Yeah. So first thing is thank you for remembering what we said 2019. So I think at that point of time if you remember we were moving towards the domains which was electrification, autonomous Infotainment that time then moved to digital cockpit, that kind of a thing. So in order to basically we had about, we had created certain what I would say solutions or visible demonstrations of what the plant will get ultimately. And I can say that actual usage of those into the actual delivery was not more than 5 to 7%. Actual program when we deliver it was not more than 5 to 7% overall.
So it was more towards understanding the requirement client, understanding what could be the functionality, what are the additional functionalities, what we could deliver, our ability, skills and you know, this is what we could do. Actually I’m talking about the actual number. This is what it is now more and more as Anup mentioned, this is not about the project. This is a full solution which you are giving to the client. And this includes people from clients who are working on this with the people from us. There may be some people from other vendors including some tier 1s or this.
So this is a more holistic solution which we are giving. So there is a huge difference and this we are expecting, I mean I don’t know what over the period will happen but at least 50, 60% kind of usability benefit in most of the solutions. I mean and this will get, as I mentioned we have just setting set up the this about two, three months back we started making the changes and that’s why Anoop has a clear goal of bringing this transition. So next six months I think we should give here and after that we’ll be in a better position to say but of course this we are doing because we expect that this will drive high quality growth for KPIT in the midterm.
Sachin Tikekar — President and Joint Managing Director
Nitin, I think there was an external factor as well which was, you know, if you remember in 2019 this was the first time all the OEMs wanted. To build software on their own. They started their own software company and they had the money and the time to do it. And the thing was everything was built ground up. That was the approach that was taken especially in all the SDB programs. If you think about it, time has changed. Now nobody has the time and the money to do this. And plus there is a lot of learning from all the programs that have been delivered. So the expectation is all of this will get done cheaper, better, faster. That’s why we think that the adoption of our solutions in today’s time it’s likely to have much bigger impact.
Yeah, there was one last question Nitin, which was about the spend on our clients from us, Europe and Japan and their spend. So as you know the pressure Continues on everybody. But they have done reprioritization. And from our perspective we see. An. Opportunity for us to grow. One is digital cockpit. That is true across the three geographies. The second is obviously as you get more and more connected vehicles with OTA in them, cybersecurity becomes a bigger concern. So we are seeing a lot of spend in cybersecurity. Third is given different countries have different approaches towards powertrain. So multiple powertrains. You know, you cannot just have battery electric. The consumers want to have options. So we see investment also in ICE now. You know, as far as the powertrains are concerned in many countries, in countries like China, navigation on autopilot has become a default.
You cannot sell an electric vehicle unless. You have navigation on autopilot in China. It’s going to the US as well as to Europe. So that’s another area. So these are the three, four areas where we have strength and we believe that the spend is going to get prioritized from the OEM’s perspective. Last but not the least, the cost reduction, the vehicle cost reduction from mechanical, electrical, electronics and also software perspective is becoming more critical. And with the acquisition of Caresoft, Caresoft’s business, we are also ready to help the OEMs. So these are the areas where we think there is going to be a lot more traction as we get into FY27.
Nitin Padmanabhan — Analyst
Got it. So just one last one as a follow up. So when you think about what has changed from then to now, as you said, obviously right now their ability to spend is lower and we are actually from what we are doing, we are helping them do it at a lower price, quicker. Do you think that what we will see is maybe better margins because of the way we are approaching this, but lower growth versus historicals or do you think we will be able to get both because we will get higher market share? So how are you thinking on this as you look at it going forward versus how it was in the past?
Kishor Patil — Co-founder, Chief Executive Officer and Managing Director
See, I think we are looking at two, three different ways. We certainly believe that we can increase our market share in a medium term. I cannot say next quarter or quarter after, but in medium term. But we also believe we will be in a position to have a better back with the AI as well as the other normal solution. We talked about other adjacencies we are talking about and we do believe that both commercial off highway and micro mobility would really bring more revenues. So this is what we believe overall. So this is our growth strategy.
And from that perspective we do believe that our we will be making significant investments. And that’s why I talked about also earlier what investment we are making. We will be in a position to be in the ballpark of the margins. We have little here and there but the similar margins in spite of the investment. But in the midterm we are very sure that the margins will improve.
Nitin Padmanabhan — Analyst
On the growth side. Do you believe it is directionally? How are you thinking? You think?
Kishor Patil — Co-founder, Chief Executive Officer and Managing Director
I did mention earlier. They increased market share in the medium term. Got it, Got it.
Nitin Padmanabhan — Analyst
Yes, I got that. I got that. Okay, perfect, Perfect. This is helpful. Thank you so much and all the best.
Sachin Tikekar — President and Joint Managing Director
Thank you.
operator
Thank you. The next question comes from the line of CA Garvik Goel from Serene Alpha. Please go ahead.
Garvik Goel — Analyst
Hello. Yes, the first question is on this changing strategy. Few quarters back we were speaking about a different strategy where we were speaking about getting the learnings from China and, and, and providing services to the European OEMs. Right. So I just trying to understand now we are speaking about different, altogether different strategy, bringing some solutions. So first question is when we are speaking about the solution, is it applicable to the existing order book or existing pipeline that we are having or is it for the newer areas, newer, upcoming pipeline that we will be getting in future?
Kishor Patil — Co-founder, Chief Executive Officer and Managing Director
I think it is both. And as you have seen that, and I think Sachin mentioned about that people prioritize what is required for actually them so many times there is a requirement but they believe that certain features, they want to put it in a car, they will prioritize it over some other things. So that’s why, I mean there have been many questions. I keep on saying, I don’t know what we call whether it be called cannibalization or changing in the priority of OEMs or what. But that’s why the decision happens on a. At that point of time from the OEMs.
We are not saying anything else. China remains important. We talked about it. I think China, Chinese companies are very. The reason the Chinese companies have been successful is they understand the consumers very well and they created many solutions or which features which can go into the car very quickly. So that remains our learning and also the technology aspects. So we continue to do that. You might have seen this time this is the second OEM we have won from Chinese Chinese oem which we are very proud of. I mean it’s not very difficult to win Chinese oem.
So I think what is it?
Sachin Tikekar — President and Joint Managing Director
It’s not easy to win. It’s not easy to win. And so I think China’s strategy is there and it will take some time but we do believe that we will be successful over the period. So solution strategy is not a replacement to the, you know, the adjacencies we talked about. The defense, China, the European part of it. This is in addition to that. Yes. Does that answer your question?
Garvik Goel — Analyst
Yes, sir. And secondly, the indications that we provided last time in Q2 regarding H2 this year, they have not yet reflected in Q3 as far as margins are concerned. And last time we also spoke on FY27 to be a promising growth year. This time we are sounding a bit bearish while still guiding for a better FY27. So I just wanted to understand from you like how to interpret this what has changed over the last quarter and are we like still confident for a very good Q4 that we guided last time and, and, and very promising FY27.
So how, how to interpret it, sir?
Kishor Patil — Co-founder, Chief Executive Officer and Managing Director
So the first thing is the nobody was labor code was being discussed for last three, four years, in last three, four months. So nobody knows. It has one time impact and it has an ongoing impact specifically for this industry. So that is point number one. Point number two, I would say that. I mentioned to you about the overall investments which we will continue to make. And I think we believe that it is very important from the company strategy to continue to do that and actually double down on that. We have. We will do that. Certainly I would say that quarter three, I had said that it will be, I think quarter three we have got a big shot about a million dollar or so in organic growth.
But that happens in this kind of environment by even some moment of projects from now to next quarter or so. These kind of changes happen in this kind of environment. And quarter four, I mentioned that based on what we think it will be better than all the three quarters we have. It doesn’t say much, but it will just say that there will be a positive growth organically and our profitability will be still including this cost will be higher than what it is. So the quality of revenue should be better. And we also mentioned that the next year will be better than this year.
Now this is what we are saying based on the work we are taking in terms of solutions. And this as you know that we are a company which will take leadership first and start working on that. And it has generally given us better results in the past. We have positioned ourselves and taken, created, you know, four, five years back. We took a bet and we worked on it, which was very difficult for many people to understand. And we delivered on that. We do believe that this will be A bet similar. It may take some time, but this will be an important pivot for us.
Garvik Goel — Analyst
That’s it for my session. All the best. Thank you.
operator
Thank you. The next question comes from the line of Hirisha Bharati from Goldman Sachs. Please go ahead.
Hirisha Bharati — Analyst
Hi, good evening and thank you for taking my questions. I was just trying to understand on businesses which we have already won over the past 12 months. In your view, what are some of. The milestones which need to be crossed before we can see some of these revenues, some of these businesses accelerating into revenues. And just secondly, can you share any early learnings post the caresoft acquisitions? What are the amount or magnitude of synergies you see from this asset? Thank you.
Kishor Patil — Co-founder, Chief Executive Officer and Managing Director
So I may say that the pipeline what we have won. We have won. I just said that the prioritization sometimes changes so it gets slowed down. But many of these deals are over three to four years. So I think these revenues will convert. I mentioned last time we had given a number also that how much cannibalization has happened last year of because of the drop. So it doesn’t reflect exactly like what has been won from that perspective. On the Caresoft perspective, I think the integration etc. We are already in the market. We are doing quite moving forward as Mr.
Tikekar mentioned. I think we are also adding to their capabilities and adding one plus one in more than three. That’s basically the potential also off highway commercial we see as a growth area. I mentioned that and Caressop gives us some good leads into that part. I would say that this is where we are also on N Dream, which is a small acquisition relatively. We see a high potential in that specifically both in terms of growth and profitability. And it is already in 2 million vehicles and we expect it to be about 3 million vehicles next year.
So this is how we start and we are trying to see that whether we can move we can really leverage that platform for adding more services on back of this engine.
Hirisha Bharati — Analyst
Thank you and all the best.
Sachin Tikekar — President and Joint Managing Director
Thank you.
operator
Thank you. The next question comes from the line of Vimal Jamnadas Gohill from Alchemy Capital Management. Please go ahead.
Vimal Jamnadas Gohill — Analyst
Yeah, thank you for the opportunity. Sir. Sir, I just had a question on the transition that we are making or a transformation that we’re making. If you could take us internally, what are the metrics you’re tracking to gauge the progress of this transition? And as investors, how should we look at what metrics should we track which you disclose in order to gauge what’s the progress being over the next 12 to 18 months. The related question over there would be ultimately what are we looking at? What is, what are the outcomes we are looking at? Maybe lower in number.
No.
Sachin Tikekar — President and Joint Managing Director
Okay, can you repeat the second part? So first is, you know, in the transition from services to solutions, what, what.
Vimal Jamnadas Gohill — Analyst
What are the key parameters we’ll look at internally? What are we tracking and what is investors? How should we look? We are probably more assured on the progress. Yes, the second one and the second related question, sir, over there would be how should we then what’s the end outcome over here? Are we looking at stickier customers? Are we looking at accelerated revenue growth maybe a few years down the line or maybe better margins? What’s the end outcome? Thank you.
Sachin Tikekar — President and Joint Managing Director
So you know, from the services to solutions, the one metric that completely changes is what becomes most important to us is the revenue per employee. That’s something that we started to also write in our report. That’s one of the key measures that not only we track internally, but that’s something that makes sense for the analysts and investors also to look at. I think this becomes the most important. Other than that, I think there are many others that we have listed out that basically change related to the progress that we are making in terms of building up the solution, getting the market ready for that.
And we have to also look at our CRM with a different length given the transition. So these are.
Kishor Patil — Co-founder, Chief Executive Officer and Managing Director
So I think what we will do is at the end of the year we will come out with a more detailed conversation on this and we will share more details about it. Right now we have some ideas, but in three to six months we will have a better idea. In three to four months we will share something. But I guess in six months we will be very sure about the criteria. And as you know, in the last three to four years we start sharing as many things as possible as soon as we have a better handle on, but we will share more at the end of the year.
Vimal Jamnadas Gohill — Analyst
The second question is what is the outcome? I think Mr. Patil already you know what to expect. Obviously increased wallet share from KPIT’s perspective. And of course in the midterm, you know, profitable growth. I think these are the two outcomes that we really expect in the midterm as we transition from being primarily a.
Kishor Patil — Co-founder, Chief Executive Officer and Managing Director
Services company to primarily a solutions company.
Vimal Jamnadas Gohill — Analyst
Understood, sir. Thank you very much and wishing you the very best. Thank you.
Kishor Patil — Co-founder, Chief Executive Officer and Managing Director
Thank you.
Sachin Tikekar — President and Joint Managing Director
Thank you.
operator
Thank you. The next question comes from the line of Ankit Agarwal from Yellowstone Equity. Please go ahead.
Ankit Agarwal — Analyst
Yeah, thank you for taking my question. My question is Related to Quartix as well as this solution based shift. It sounds like what we are doing in Quartix is also solution driven although we are packaging it as a product. So just want to understand what is the difference and also what is the traction we are getting on Codex.
Anup Sable — Chief Technology Officer
Codex is both a product and a solution. When typically the complexity of a middleware software is you can never really take it shrink wrapped, but the attempt is to make it as shrink wrapped as possible. But whatever you deliver to the customer, there is always going to be an effort in terms of integration application software for that. So that is the explanation on whether the Corex is actually a product or a solution. It’s combination of both.
Kishor Patil — Co-founder, Chief Executive Officer and Managing Director
So I think as you can see some quarters this quarter we have got a good profit. I don’t know about the next quarter. So it is based on the licenses I think. One thing I can tell you is there are again multiple changes which are happening. One is the vehicle, new vehicle programs have been pushed down because of the problems OEMs faced in the existing program as well as keeping the spending, I mean I would say postponing the spending on the new programs. So because of that the middleware and the operating system spend went ahead and that’s the reason it doesn’t have as much traction as we had expected till now.
But we believe this will be, as you probably know, that this has become the part of a European Union software partnership which the European companies have made and there are very significant OEMs who are part of that. So we do believe that this is something again which will be. This is very unique and we feel that this will have its fair share in some time.
Ankit Agarwal — Analyst
Okay, so is it fair to say that Coordix is mostly focusing on middleware and architecture, whereas our solutions based approach is granular across so many different domains?
Anup Sable — Chief Technology Officer
Yes, actually Codex is less than architecture is mostly middleware. Architecture is a much more comprehensive subject with KPIT handling, it’s not a part of the Corex activity. Whereas KPIT is handling, you know, maybe across all the domains. Now the including. Because architecture is also a domain for us now including architecture domain, KPIT is handling solutions across multiple domains.
Ankit Agarwal — Analyst
Okay. Okay. Yeah, that’s, that’s helpful.
operator
Okay, thank you, thank you, thank you. Your next question comes from the line of Sandeep Shah from Equeria Securities. Please go ahead.
Sandeep Shah — Analyst
Yeah, thanks for the opportunity. In this pivot to solution driven business, is it fair to assume as we have taken a lead in SBV ahead more six years in terms of solution based delivery Method we are planning to deceive the same thing which will help us in terms of winning the further wallets here and may help some of the Western OEMs, both in the US and Europe to launch the new model as fast as Chinese players or the OEMs are launching and taking the wallets.
Anup Sable — Chief Technology Officer
Yes, your line is not very clear, but let me explain what I understood out of the question. Is your question to summarize, is the solution offering that we have to the OEMs going to increase or better their time to market? Yes, the answer is yes. Most of the solutions that we are talking about, some of them definitely, some of them are really about very, very difficult thing that the OEM does during the development of a vehicle. And because we have these solutions ready, we definitely feel that the time to market will significantly decrease for the oem.
Sandeep Shah — Analyst
Okay. Okay. And just another related question, more as a bookkeeping in a pivot to solution, you will not change any accounting policy in terms of capitalizing the development cost. We may continue to not capitalize and take it to pnl. Is it the understanding correct?
Kishor Patil — Co-founder, Chief Executive Officer and Managing Director
As you have seen for many years, we have not capitalized anything unless there is a new investor in a certain area. So in the normal course of business, there won’t be any capitalist.
Sandeep Shah — Analyst
Okay, thank you. All the best.
Anup Sable — Chief Technology Officer
Thank you.
operator
Thank you. The next question comes from the line of Samir Dhosani from ICICI Prudential.
Kishor Patil — Co-founder, Chief Executive Officer and Managing Director
Thanks for the opportunity. I hope I’m audible want to understand.
Anup Sable — Chief Technology Officer
I’m not sure whether this is already addressed.
Kishor Patil — Co-founder, Chief Executive Officer and Managing Director
So Asia as a geography has been declining for a few quarters. And what I understand, we had a very.
Anup Sable — Chief Technology Officer
We had a mega deal here.
Kishor Patil — Co-founder, Chief Executive Officer and Managing Director
We have a large client and they’ve been, you know, backtracking or you know, they’ve been reducing spending in certain areas. So can you throw some light? What will happen in Asia as a geography and when will we start growing for us? Yeah, that’s the first question.
Sachin Tikekar — President and Joint Managing Director
We look at Asia in two regions. One is Japan, Korea, China. Second is India and Southeast Asia and Middle East. Now, you’re right about a specific oem. We’ve been doing a really large program and all large programs come to an end. So we’ll go through that. However, what we have done in Japan is we started working with a couple of others and hopefully over a period of time that will give us some growth not only in Japan, but also in Korea. And as Mr. Patil explained, we have started to see some wins coming out of China.
So as a region, we believe that it will come Back in some time. However, the India and Southeast Asia part will grow. It’s been growing for us and we see a lot more growth now that India has become the focus for most.
Anup Sable — Chief Technology Officer
Of the OEMs across the globe.
Sachin Tikekar — President and Joint Managing Director
So it’s not only the India OEMs, the existing OEMs, the new OEMs, new age OEMs in India. But at the same time, the global OEMs want to come and look at India for India. And that poses an incredible opportunity for kpit. And I think most of our solutions will be ready in time to help these OEMs launch new vehicle programs in India. So we remain very bullish on India, not only now, but in the foreseeable future. That’s how I would. So, you know, I. Yeah, that’s what I would say for now.
Sandeep Shah — Analyst
So Asia will continue to remain stable, decline and then start going like it will take 6 months, 12 months. How to think about that? That is my.
Sachin Tikekar — President and Joint Managing Director
Yes, I think we’ll see some ups and downs with really large programs. We have to make some adjustments. So we’ll see some ups and downs. But in next two or three quarters we’ll see growth coming back in Asia as well. Because we’ve been sowing seeds into new OEMs across Asia and some of them have started to grow, some will take. A little bit longer.
Sachin Tikekar — President and Joint Managing Director
So yeah, I would say, you know, by middle of next year we should start to see growth coming back in Asia.
Kishor Patil — Co-founder, Chief Executive Officer and Managing Director
To add what we said in Asia, we have broken this into two geographies as Mr. Pikekar mentioned and that you will start seeing that we will start reporting also from the next year and we see a significant growth in this India and Southeast Asia and will be this kind of geography. And as we say even China we see that and we have in Japan and Korea is where we will see few ups and downs but stabil stabilize. Got it sir. That’s good to hear.
Anup Sable — Chief Technology Officer
And second is, sir, when you speak.
Kishor Patil — Co-founder, Chief Executive Officer and Managing Director
About consolidation, right, so like there are three buckets where you can consolidate, right? One is obviously to being work work that is getting done in the oem. You outsource that and gain wallet share. Second is you gain wallet share from on site based vendors. And third is from offshore led India pair. So obviously consolidation would be a factor of all three. But where is the maximum share coming from at this point of time? When you consolidate vendors you try to not exactly like that, but in Europe it is from the on site vendor. That’s right.
Sachin Tikekar — President and Joint Managing Director
I think it’s all three. You know, in Europe, as Mr. Patil said it’s mostly consolidation movement from largely local vendors to more of global vendors. And with solutions, you know, it really doesn’t matter whether it’s on site or offshore.
Sandeep Shah — Analyst
Right.
Sandeep Shah — Analyst
The world becomes a level playing field.
Sachin Tikekar — President and Joint Managing Director
So we compete and we win against the competition.
Sandeep Shah — Analyst
Got it, Got it. That’s, that’s good to hear and thanks for taking my questions and all the rest of the future. Thank you so much.
operator
Thank you. The next question comes from the line of Bhavik Mehta from JP Morgan. Please go ahea
Bhavik Mehta — Analyst
d. Hi. Thank you. The first question is, you know if you look at your here some entry over the last few weeks, everybody’s talking about demand outlook, faster these conversion to revenues which you’ve been accessing forward. So just curious to know, do you share the same outlook or is it something different for KPI training? Yes, I’ve been talking about a good growth in open.
Kishor Patil — Co-founder, Chief Executive Officer and Managing Director
Yeah. So I think we have given the sense of what we are seeing, we are not saying it is. I mean we told, we have mentioned how the different geographies are behaving. We of course as you know that as compared to most of the other we have a much wider scope in terms of clients and the market as well as the volume. We don’t see that it’s a general buoyancy that we are not seeing and we are seeing actually the change in the behavior of OEMs and the requirements and we believe that if this what steps we are taking are most important in terms of long term growth potential and that’s why we are taking this growth.
So we would not generally make a statement. We would say that off highway, commercial there is a growth which we will see but not exactly the same statement in case of passenger across on board.
Bhavik Mehta — Analyst
The second question on the AI solutions. So we are seeing a lot of IT companies and even some of your peers try this solutions approach or IT based approach in the past but haven’t seen much success out there. So what is different this time with you confident that DI Solutions can become a bigger part of your business in the next two to three years and is there any target you have in mind in terms of how much the solution can contribute to revenues versus the next year, three year period last last six months.
Anup Sable — Chief Technology Officer
I’m personally actually executing projects where internally we are solving the problems using AI. That makes me more confident, makes us very confident in terms of what it can do and how it can be done. Okay. So we are very clear about what AI can deliver to our customers. I would suggest you also listen to the interview that Anthropic CEO had given during Davos, we are in full agreement with him that we have the solution ready to solve our customers problem. I think it is up to the customer’s adoption now in terms of how they adopt AI quickly into their lifestyle cycle.
Sachin Tikekar — President and Joint Managing Director
But we are ready and I think what has changed from last time there are two things. It didn’t work as much so you know, a lot of lessons learned. And I think this time most of the solutions have been vetted by the clients and some of them are already been piloted during the course of this year and last. So that gives us a lot more confidence that, you know, this time it’s going to take some time as Mr. Patil mentioned, you know, 12 to 18 months before we start to make the shift. And in the next couple of years we would want majority of our business to come from solutions.
Kishor Patil — Co-founder, Chief Executive Officer and Managing Director
One thing I mentioned is we are focused only on mobility and that gives a very different advantage as compared to.
operator
Okay, thank you. Thank you. The next question comes from the line of Vidyadhar Ginde from Soham Asset Managers Private Limited. Please go ahead.
Vidyadhar Ginde — Analyst
Yeah, thank you. So my first question is that in. The last few quarters when your growth. Has slowed down as your share of the pie gone down or you’ve lost market share or the pie itself for. You has gone down, or is it both?
Sachin Tikekar — President and Joint Managing Director
So basically if you look at mobility from passenger car perspective, their spend has gone down by 20 to 25%. It’s dramatic. I think their volumes have gone down substantially, their profits have gone down even more. Except for one or two clients, we have not lost our wallet share in any of our T25 clients. In case of majority, they have actually gained wallet share. So basically the pie has shrunk quite a bit. And you know, that’s the reality at this point.
Kishor Patil — Co-founder, Chief Executive Officer and Managing Director
The other way to look at it, if you look at an industry, all other air IND providers and you look at their automotive business, mobility business, in the year on year they have a significant reduction in the, in this sector.
Vidyadhar Ginde — Analyst
Okay, so my second question also your. Medium to long term outlook, if I’m not wrong, will depend on whether these. Global OEMs which dominated global market share. Whether they can stop losing market share to the guys who were ahead in. The new world, which is Tesla and the Chinese guys. So am I correct in assuming that your medium to long term outlook really. Depends on these guys or then making otherwise making dramatic market share gains in. The challengers who are gaining market share?
Kishor Patil — Co-founder, Chief Executive Officer and Managing Director
There are three answers to your question. First is this was exactly the question people asked me in 2019. People said that there is a Tesla and Tesla will take all the business from all those years. That was 2019. 20. This was asked very often. That was number one. Number two, I would say that we have started working with Chinese and we have been successful in getting Chinese clients. This itself tells us that we are doing something right. And we do hope that, I mean we are very sure that this automotive business is so critical to the economy.
This forms roughly 15% of the GDP of most of the country. So it’s very critical and many OEMs will survive. So actually the transformation will help. I mean we would be of a help to them. Third is we are also going into certain different adjacencies as well as area like commercial where we believe that we will be in a position to grow in that area. So that’s if I would say broad based strategy we have adopted.
Vidyadhar Ginde — Analyst
So just to take this further, you. Are reasonably confident that a lot of your global legacy OEMs will survive, stop losing market share? Is that the case?
Anup Sable — Chief Technology Officer
I will say that they will continue to spend. That’s what I would say. They will prioritize their spend and they will like they would take a call in terms of being which are the profitable lines versus the other line. So their volume you cannot say. But the people will adjust their strategy to that line and most of the OEMs will continue. But I’m sure there will be few casualties. That’s what we mentioned earlier. What comes to my mind is the mobile industry when from being a market leader, you know where it is now. So do you see at least the. Only guys put up a year. At least it’s not just one. Okay. It’s a lot of volumes put together. There’s a big difference in these two industries because you don’t expect that pattern that there’s a big difference between these two. Because the life of a shelf life of a mobile phone versus the life of a car which is there on the road for 12 to 15 years is very different. The type, what it requires is very different. So it’s a different ecosystem and life cycle.
Vidyadhar Ginde — Analyst
Thanks, Anand.
Sachin Tikekar — President and Joint Managing Director
Thank you.
operator
Thank you. Your next question comes from the line of Ankur Pant from IIFL Finance. Please go ahead.
Ankur Pant — Analyst
Hi, thank you for taking my question.
Sachin Tikekar — President and Joint Managing Director
Ankur, we are not able to hear you clearly.
Anup Sable — Chief Technology Officer
Could you be a bit louder?
Ankur Pant — Analyst
Is it better now?
Sachin Tikekar — President and Joint Managing Director
Yes, this is better.
Ankur Pant — Analyst
Yeah. So thanks for taking my questions. Has two questions. The first is as you highlighted mobility ER&D budgets have fallen Sharply last year. So just an initial sense of your conversations, what does it suggest for this year? A stabilization? I mean do you expect stabilization? Do you expect decline to continue or is there some growth also that you are building in? Just wanted some color on that, Ankur.
Sachin Tikekar — President and Joint Managing Director
As I mentioned earlier on, of course all the OEMs continue to be under pressure so the overall spend is not likely to go up. However, there are certain areas where they are prioritizing spend and I called out those areas earlier and those are the areas where we actually specialize. We have deep specialization, you know, digital cockpit, cybersecurity, then navigation on autopilot and also multiple powertrains. I think this is where they are prioritizing their spend and we are also bringing in the cost reduction element from the vehicle perspective. So these are the five areas that are in fashion in the minds of the OEMs and we are ready to take those on.
Ankur Pant — Analyst
Thanks. And my second question is with respect to the solutions pivot now historically for AI and pre built solutions, OEMs have been generally varied given that there are risks involved in a vehicle. So what is changing this time? And given the upfront nature of investments that you would need to make on this, what gives you the confidence that multiple solutions will see broad based adoption across OEMs? So they would have been vetted by a few clients, but what gives you confidence in the broad based nature of adoption?
Kishor Patil — Co-founder, Chief Executive Officer and Managing Director
Yeah, I think it is our experience. I think in most the cases we know and now the few more discussions we are having, it is not a choice for them. It is not it. They have a choice to do something or think. Here they are stuck with the production programs and they are not sure whether they can really come out with a vehicle. This happened with two OEMs. And now we have some more discussions and in order to take it out there are hardly any alternative solutions and where we are ready to take the whole responsibility.
We are not just giving a tool. We are not giving just. We are not doing what they tell us to do. We are ready to take the full ownership and deliver.
Ankur Pant — Analyst
Perfect. Thank you. And all the best for CY20. Thank you.
operator
Thank you. The next question comes from the line of Rohan Nagpal from Helios Capital Management. Please go ahead. Hi. Thanks for taking my question. I just wanted to follow up on the, on the, on the customer project that you said is coming to an end in Japan. How so? I think after the, after we announced the megade with Honda JPY revenue went from being somewhere around 10 million a quarter to all the way up to 40 announced to 30. Where, where does it sort of bottom out in terms of this engagement? Because I think at the time that the engagement was announced we said that KPIT will work with Honda through 2030.
Has that been part of the reprioritization in any way?
Kishor Patil — Co-founder, Chief Executive Officer and Managing Director
I think that is correct. We’ll continue to work with them and there are different programs. We are continuing to work with them and this program is as other programs it has delayed. So some of the new programs have been little bit pushed out and some of these changes are because of that. But we absolutely strategically in place with the OEM and will continue to work 20, 30 and beyond. Typically our OEM engagement. If you have seen There are many OEMs who are working for 20 years and the business has not got down, it keeps on going up.
So it takes some time. This was a very large deal. And specifically I talked about the Japan part where the economy has got impacted specifically through the uncertainties and etc. So there are some what I would say that delays in the production program, in the delivering the whole for the taking of the new programs, investing into new programs and that may impact little bit. It will impact to some extent but it is not going to be like it will not going to be. Okay. But are we close to steady state right now or is there more sort. Of. People get a better handle. So I would say we don’t know in one or two quarters it may go down further or not but over the period if you look at at the end of the year we would be more because then the new opportunities which are happening new programs which are happening with catching. So it’s very hard to tell quarter to quarter client wise we never never give any answer on.
Ankur Pant — Analyst
Fair enough. Okay, that’s it for mine. Thank you.
Anup Sable — Chief Technology Officer
Thank you.
operator
Thank you. The next question comes from the line of Karanopal from Philip Capital India. Please go ahead.
Karanopal — Analyst
Yeah, thanks for the follow up. Just the bookkeeping questions. So interest cost has inched up in last few quarters. Do you expect this to remain elevated in next few quarters? Or maybe in FY27? And secondly depreciation has also increased to 81 crore. After full integration of Caresoft. Shall we expect this depreciation line item to stabilize from Europe? Yes, depreciation line item will stabilize this quarter. It had a full impact of end dream customer intangible as well as one month of care soft. So it will stabilize. Second question was on the interest cost in interest cost we did have interest cost on the borrowing that we had previous quarter as well as some of the index cost on the goodwill calculations and the acquisition accounting.
So yes, both these costs will stabilize now. So PNN, this interest cost, shall we assume this 23 crore as a run rate for future borders? No, it can lower a little bit, but yeah, more or less in the same range. Okay. Okay. And thank you and all the best for fit.
Sachin Tikekar — President and Joint Managing Director
Thank you.
Anup Sable — Chief Technology Officer
Thank you. I think we are already over time. So I think we should end the call now.
operator
Yes, we’ll take this as the last question and I now hand the conference over to the management for closing comments.
Anup Sable — Chief Technology Officer
Thank you very much. So thank you everyone for being on.
Sachin Tikekar — President and Joint Managing Director
The call and wish you all the best.
operator
Thank you.
Kishor Patil — Co-founder, Chief Executive Officer and Managing Director
Bye.
operator
Thank you on behalf of Dalit Capital. That concludes this conference. Thank you all for joining us. And you may now disconnect your lines. It.