Prestige Estates' profit fell by 19% in the first quarter despite a 16% revenue increase

KPIT Technologies, a company specializing in engineering research and development for the automotive industry, reported a decline in net profit in the first quarter of the fiscal year 2926-27 (Q1FY27). The profit amounted to 116.4 crore rupees, significantly less than the 171.89 crore rupees recorded in the same quarter of FY26. Quarter-on-quarter (Q-o-Q) profit for the company dropped by 28.5 percent.

Revenue and Market Dynamics

Revenue for Q1FY27 reached 1,675 crore rupees, demonstrating an 8.8 percent year-on-year (Y-o-Y) growth. However, compared to the previous quarter (Q-o-Q), revenue decreased by 2 percent. Furthermore, revenue adjusted for constant currency increased by 0.1 percent.

Despite the slowdown in revenue growth, the company's shares rose by 10 percent during the day on Wednesday, as the revenue drop was less significant than previously forecasted by management in the month. By the end of the trading day, the stock price increased by 6 percent, reaching 638.6 rupees per share.

Challenges in the Automotive Segment

KPIT's performance reflects difficulties and pressure within the automotive sector. Company management acknowledged that the pressure is particularly felt in Europe, where Chinese car manufacturers are exerting strong competition.

The total contract value (TCV) of new agreements signed in Q1FY27 was $257 million. This amount is substantially lower than the $349 million recorded in the previous quarter, which ended on March 31, 2026.

Management Comments on Strategy

Kishor Patil, Co-founder, Managing Director, and CEO of KPIT, noted that the Q1FY27 results were slightly better than the expectations set at the end of the quarter. He emphasized that although some of the largest clients continue to face difficulties, the strategy of diversifying growth across customers, geographies, mobility segments, and offerings is beginning to show resilience.

Patil added that Artificial Intelligence (AI)-based products and solutions have become a common element of the company's portfolio. He reported positive momentum in areas related to mobility, defined AI, vehicle design, digital cockpit, autonomous technologies, and after-sales service. In his view, focused investments, unique opportunities, and trusting relationships with clients enable the company to prepare for stronger growth in the second half (H2) of FY27 and beyond.

Prospects and Competency Development

The company's EBITDA for Q1FY27 was 17.2 percent, with the margin suffering due to revenue contraction. However, it is expected that profitability will grow consistently in each subsequent quarter due to the change in revenue structure, growth, and efficiency improvement through AI. Sachin Tikekar, President and Joint Managing Director of KPIT, stated the expansion of presence in high-growth client accounts, acceleration of pace in truck and SUV segments, establishment of ties with new passenger car manufacturers, strengthening leadership in AI-defined vehicles, and the integration of AI-based products and solutions into all offerings and customer interactions. Simultaneously, the company continues to deepen its competencies in vehicle design, powertrains, diagnostics, cybersecurity, and after-sales software.

The net profit of cement manufacturer ACC for the first quarter of fiscal year 27 decreased by 60.90% compared to the same period last year, amounting to 147 crore rupees. The company attributed this decline to the impact of scheduled maintenance at large integrated plants, an increase in the Master Supply Agreement (MSA) with parent company Ambuja Cements, and a drop in sales, revenue, and margins.

First Quarter Financial Performance

ACC's operating revenue for the reporting quarter decreased by 8.22% year-on-year, reaching 5,808 crore rupees. Meanwhile, the company's total expenses for the period under review were reduced by 3.35% to 5,639 crore rupees. Sales volume also fell by 6.54% year-on-year, totaling 10 million tonnes, which was linked to the higher MSA with Ambuja.

Operations and MSA

ACC's Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) for the quarter stood at 457 crore rupees, which is 41.33% less than the previous year. The company's margin in the first quarter of FY27 was approximately 7.9%, compared to 12.3% in the first quarter of FY26. The company links the decrease in sales volume and operating EBITDA to the terms of the aforementioned MSA.

The MSA allows ACC and Ambuja to supply cement to each other to meet customer demand. Under this agreement, if one company faces a supply shortage or receives an order exceeding its production capacity, the other party can fulfill that need. During the quarter, a large portion of sales was channeled through the MSA, and scheduled maintenance at ACC's large integrated plants negatively affected the company's sales volumes and profitability.

Management Comments and Outlook

Vinod Bahati, Director and CEO of ACC, noted that the company started FY27 with stable figures, supported by the growth in trade volumes and continued premiumization. He emphasized that the quarterly profitability reflected the impact of scheduled maintenance and the increased MSA with parent Ambuja Cements, despite prioritizing value growth and quality earnings.

Furthermore, electricity and fuel costs in the first quarter of FY27 decreased by 8.93% year-on-year to 785 crore rupees, while the cost of consumed materials dropped by 10.29% to 1,002 crore rupees. Freight and expedition expenses amounted to 1,047 crore rupees, which is 8.47% lower year-on-year.

Bahati added that thanks to strategic capacity expansions in Salai Banwa and Kalamboli, operational excellence ensured by CiNOC, and customer-centric solutions, the company anticipates improved performance in upcoming quarters. He also stated that Adani Cement intends to achieve cost reductions of approximately 250 PMT (per metric ton) on a consolidated basis in FY27, leveraging the strengths of the integrated business model and group synergy.

History and Future Plans

The first quarter of FY27 marked the third consecutive quarter in which ACC reported a decline in profit. Previously, in the third quarter of FY26, profit fell by 62.97% year-on-year to 404.21 crore rupees, which was attributed to the high base effect in the third quarter of FY25. In the fourth quarter of FY26, profit declined by 68.27% year-on-year to 238.25 crore rupees due to pressure from fuel and diesel costs, restrictions on packaging bag supplies, rupee devaluation following the Middle East conflict, and the impact of one-off items in the fourth quarter of FY25.

Quarter-on-quarter (Q-o-Q), ACC's profit in the first quarter of FY27 decreased by 38.23%, and revenue by 18.72%. The company also announced progress in creating the One Cement platform through the proposed merger of ACC with Ambuja Cements. The no-objection certificate was obtained from the Securities and Exchange Board of India (Sebi) on June 4, 2026, and the application was filed with the National Company Law Tribunal (NCLT) on June 29, 2026. The merger is expected to be completed within FY27.

Regarding the Middle East conflict, ACC indicated that the Indian cement sector experienced cost pressures in the first quarter of FY27 due to higher prices for imported fuels such as petcoke and coal, as well as increased freight and logistics costs resulting from geopolitical events in the Middle East. The company noted that the expected impact of fuel price inflation will peak in the seasonally weaker second quarter, potentially affecting industry profitability in the near term, and it continues to mitigate this pressure through fuel mix optimization, increased use of renewable energy, enhanced logistical efficiency, focus on higher-margin markets, and disciplined cost management.