KPIT Technologies Ltd Management Discussions

GLOBAL OUTLOOK

The January 2026 IMF Global Economic Outlook projects global growth at 3.3% for 2026 and 3.2% for 2027, which continues to remain below the 20-year average of 3.7%.

These forecasts are broadly in line with the estimated

3.3% outcome for 2025, and reflecta balance between upside forces such as AI-driven investment, fiscal support, financial and easing inflation accommodative and offsetting downside forces, including trade uncertainty, structural slowdowns in major economies, and fading post-pandemic rebounds.

Global headline inflation is expected to follow a downward trajectory, easing from an estimated 4.1% in 2025 to 3.8% in andbooksofaccountsoftheCompany. 2026, and is expected to moderate further to 3.4% in 2027.

Global monetary policy is expected to remain broadly accommodative but cautious, with gradual easing where inflation is near target, selective normalization where appropriate, and continued data-dependent stances amid lingering inflation risks and financial stability concerns. World trade volume growth is expected to ease to 2.6% in 2026 from 4.1% in 2025, before recovering to 3.1% in 2027, reflecting front-loading effects and the ongoing adjustment of trade flows to shifting trade policies, despite resilience in technology-related trade. The conclusion of major bilateral and free trade agreements by large economies signals a positive outlook for global trade and is likely to help cushion the shocks arising from uncertainty around the U.S. tariff regime.

Global financial conditions The US dollar weakened modestly, as expectations of Federal Reserve rate cuts and US fiscal concerns outweighed periodic safe-haven lifts from geopolitical risk.

US demand remains resilient but is gradually moderating. According to the January 2026 IMF projections, the US economy is projected to grow at 2.4% in 2026 and to moderate to 2.0% in 2027, an improvement over the 2025 estimate, with growth supported by fiscal easing, lower interest rates, and technology investment, while vulnerabilities stem from high trade policy uncertainty, elevated living costs, stretched asset valuations linked to AI, andpotentialfinancial market corrections. The Euro area recorded 1.4% growth in 2025. According to the European Central Bank (ECB), the euro area economy is expected to grow modestly, with real GDP rising 0.9% in 2026 before gradually strengthening to 1.3% in 2027 and 1.4% in 2028.

The Euro area outlook remains characterized by modest but resilient growth, reflectingpersistent weakness in manufacturing, services-led expansion, tight labour conditions, and temporarily softer consumption owing to energy-driven inflation. Household savings are easing slightly, while investment continues to be underpinned by fiscal support, defence expenditure, and infrastructure investment.

According to first calculations of the Federal Statistical Office (Destatis), Germanys price-adjusted GDP in 2025 was 0.2% higher than in the previous year. The January 2026

IMF forecast indicates a modest recovery in Germany, with growth set to increase to 1.1% in 2026, driven by stronger public spending and tentative stabilization in manufacturing, while enduring structural headwinds including elevated energy costs, subdued external demand, and geopolitical risks continue to constrain growth.

As per the Office for National Statistics, the United Kingdom GDP is estimated to have increased by 1.4% in 2025. The Office for Budget Responsibility forecasts real GDP growth of 1.1% in 2026, before averaging 1.6% in 2027. A loosening labour market and falling energy and food price inflation contribute to inflation reaching its 2% target in late 2026. According to Banque de France, GDP grew by 0.9% in 2025 and is expected to remain stable at 0.9% in 2026 and 0.8% in 2027.

China grew by 5% in 2025. The IMFs January 2026 forecast projects growth of 4.5% in 2026 and 4% in 2027, aided by policy support and reduced U.S. tariff pressures, though momentum is expected to weaken thereafter as structural constraints, including soft domestic demand and housing-sector stress, resurface. India remains one of the fastest-growing large economies, with projected growth of 6.4% in both 2026 and 2027.

While the broader macroeconomic backdrop is one of remain broadly accommodative. moderate but resilient growth, it is the automotive and mobility industry, KPITs core market that is undergoing the most profound change, as the same forces of trade realignment, shifting energy policy, and the rapid maturing of AI reshape how vehicles are designed, built, and serviced.

INDUSTRY TRENDS

FY 2025-26 was a year of recalibration and transformation for the global automotive and mobility industry. The combined effect of macroeconomic pressure, evolving trade and energy policy, and the rapid maturing of Artificial Intelligence reshaped both the priorities of original equipment manufacturers (OEMs) and the way engineering programs are funded and delivered. While near-term spending patterns were disrupted, the structural direction of travel towards software-rich, AI-enabled vehicles continued to strengthen.

Four forces defined the operating environment. First, tariffs and geopolitical conflicts introduced fresh uncertainty into global supply chains and cross-border trade. Second, shifting electric-vehicle and emission policies in the United

States and Europe prompted OEMs to re-sequence their product roadmaps. Third, continued supply-chain disruption kept cost and resilience high on the management agenda.

And fourth, the rapid maturity of AI began to change the economics of software development itself.

For OEMs, these forces translated into real financial consequences. Several manufacturers absorbed multi-billion-dollar write-offs as they reset their electrification plans, while a number of established Western and Japanese players continued to lose market share in China and faced growing competition from Chinese OEMs in other regions. Margins came under pressure, and manufacturers responded by reviewing and re-configuring their research and development budgets towards AI-first development: protecting spend on the areas that differentiate them while seeking to take cost out elsewhere.

A direct consequence was the deferral of several new vehicle and electrical/electronic (E/E) architecture programs, particularly in the passenger-car segment. Such delays moderated near-term engineering demand; however, they also build a larger future opportunity, as integration and validation needs intensify precisely when these programs move towards launch and a proven engineering partner becomes indispensable.

The picture varied by segment. Passenger cars remained under the greatest pressure, even as overall software spend reset upwards. The trucking industry experienced a cyclical slowdown that is expected to ease in the second half of 2026, while off-highway players, many of them financially robust continued to invest proactively, increasingly adopting software-definedand AI-based development for their next-generation machines. Across segments, after-sales emerged as a strategic priority, as OEMs look to generate revenue across the entire life of the vehicle rather than only at the point of sale.

Regionally, China remained an intensely competitive and consolidating market, prompting global OEMs to pursue

China-for-China strategies to defend their position; India emerged as the next major growth market, with both domestic and global manufacturers investing in India-for-India products; and newer pools of demand began to open up across Southeast Asia, the Middle East, and Africa.

Underlying all of these shifts is the defining role of AI. While AI can dramatically increase software-development productivity, it also generates far greater volumes of code which in turn multiplies the complexity of integrating and validating that software within a vehicle. As a result, the premium on integration, validation, and quality engineering is rising, not falling. In short, macro and technology shifts have reconfigured near-term R&D spend, but the mid- long-term outlook for automotive software remains robust.

NAVIGATING THE SHIFT: THE LONG-TERM

OPPORTUNITY FOR KPIT

The long-term opportunity for KPIT is anchored in a structural expansion of automotive software spending. Based on an external assessment drawing on the McKinsey

(January 2026) report and KPITs own internal analysis, the automotive software market is expected to almost double over the second half of this decade, from approximately USD 40 billion in 2025 to approximately USD 71 billion by 2030. Spending on software and electrical/electronic (E/E) components continues to outpace the industry as a whole. Importantly for KPIT, this growth is concentrated in precisely the areas where the Company is strongest. Over the period to 2030, spending on Autonomous Driving and ADAS is expected to grow around three-fold, Infotainment and Digital Services around one-and-a-half times, and Middleware and Operating Systems to remain broadly stable. Within the vehicles electronic backbone, E/E architecture spend is expected to grow around six-fold as vehicles move to modern zonal and centralized computing and spending on integration and validation is expected to roughly double.

Auto software spend remains strong, led by AI, and beyond electrification there is high growth across other domains.

A clear shift is also underway in where value is created. As AI generates larger volumes of software, the proportion of spend devoted to software integration, validation and verification services is rising sharply pegged to around USD 14 billion in 2025 to around USD 27 billion by 2030. In other words, the harder and more valuable problem is no longer simply writing software, but making it all work together reliably and safely. This is the heart of KPITs long standing expertise.

The opportunity is near at hand rather than purely futuristic.

More than 80% of spending through the period will be directed at current-generation (Gen 3 and Gen 4) vehicle programs, which are expected to account for the majority of activity even as next-generation (Gen 5) architectures scale up. AI-led brownfield engineering on these existing programs, enhancing and validating them with AI represents the larger near-term opportunity. As a trusted partner already engaged in at least one lifecycle stage of the large majority of these programs across its top clients, with intimate knowledge of their architecture and technology, KPIT is well positioned to capture this AI-led engineering spend.

With a clear focus and carved out strategy KPIT intends to leverage these opportunities with three reinforcing moves: i) Deepening wallet share within its strategic accounts, where it sees share of around 10%; ii) Expanding into new geographies like India, China, Korea, Southeast Asia, and, over time, the Middle East and Africa; and iii) Unlocking new revenue pools from adjacencies beyond passenger cars, including trucks and off-highway, micromobility, and selected deep-tech domains. Alongside this, the continued shift towards solutions, products, and outcome-based engagement d software: everything beyond the vehicle, such Offboar models is expected to raise both the value and the quality of the Companys revenue.

Taken together, these opportunities support the Companys medium-term ambition of deriving more than half of its revenue from solutions and products, of pursuing sustainable double-digit growth as the current transition matures, and of expanding profitability over time as the higher-value mix takes hold. While the pace of realization will depend on the external environment, the direction is clear: the long-term opportunity for KPIT is larger, and more closely aligned to its core strengths, than at any point in its history.

KPIT OVERVIEW AND UPDATES

KPIT is reimagining the future of mobility, forging ahead with group companies and partners to shape a world that is cleaner, smarter, and safer. With over 25 years of specialized expertise in Mobility, KPIT is accelerating the transformation towards Software and AI-Defined Vehicles through its advanced solutions, platforms, and products - propelled by mobility-infused AI frameworks, software craftsmanship, and systems integration mastery.

Vision in Motion: Fueled by 2000+ vehicle production programs and powering 20+ million vehicles on the road with

KPIT software, our experience is unmatched. At the same time, we push boundaries, developing solutions that enable Mobility OEMs to innovate at speed and scale. Over the years, the Company has grown from a trusted engineering services provider into a systems-and-software integration partner that increasingly delivers its own solutions and products.

This year, KPITs story is best understood through the lens of AI-led engineering, delivered with resilience. The mobility industry has faced a succession of shocks - the pandemic, supply-chain disruption, tariffsand conflicts, and now the rapid arrival of AI. Rather than treat each as a one-off event,

KPIT has spent the last two years deliberately building an organization designed to absorb continued disruption and keep growing through it. Central to that resilience is balance: the Companys future growth is designed to ride on all four engines of its business, and on a widening set of segments beyond passenger cars, so that it is not dependent on any single technology cycle.

KPITs work spans four complementary areas of a vehicles software and engineering content: headroom from a current average

• Propulsion: software engineering and validation across electric, hybrid, conventional, and emerging hydrogen powertrains.

• In-vehicle software: the software inside the vehicle, including connected and digital cockpit systems, autonomous driving and ADAS, body, chassis, and the underlying platforms. as cloud and connected services, diagnostics, data, and after-sales.

• Vehicle Engineering, Design and Manufacturing (VEDM): benchmarking, cost reduction, value engineering, and manufacturing efficiency, capabilities.

Growth across these four pillars, and across adjacencies such as trucks and off-highway, micromobility, and deep tech is expected to become progressively more balanced, which is itself a source of resilience.

BUILDING THE TECHNOLOGY MOAT

A modern vehicle is one of the most complex machines in the world more than a hundred computers and several networks that must work together in real time, and without fail, every time a driver brakes or steers. It is also a ruthlessly cost-constrained product, where a few dollars saved per car add up to hundreds of millions at scale, and where the same software must run across many different models.

The hardest part of building such a vehicle is therefore not writing the individual pieces of software, but integrating and validating them so that the whole works as one. AI has only raised the stakes: it lets engineers generate software many times faster, yet every additional line multiplies the challenge of making it all work together inside the vehicle.

This is the problem KPIT was built to solve, and it is the foundation of the Companys technology moat.

At the heart of that moat is Beacon, KPITs Mobility Intelligence Product. Modern vehicles are software-defined and built on complex architectures, strict standards, and years of accumulated engineering decisions, context that generic AI tools simply do not have. Beacon is purpose-built to bridge that gap: an AI-infused mobility product, drawing on KPITs learnings from more than 2,000 production programs across 25-plus global OEMs, that reimagines the entire software development lifecycle through a system of specialized AI agents. Because it understands engineering context, automotive standards, and intent, Beacon works the way engineers already work running within their existing toolchains rather than forcing them to step outside. Crucially for an enterprise and safety-critical setting, it is deterministic, auditable, and reviewable, and a clients data always stays within its own environment and is never used to train external models. The result is a trusted, production-grade capability delivering more than 30% faster software deployments and over 30% improvement in reliability through rapid bug-fixing andtriaging.

This capability has not been built overnight. KPIT has consistently invested over 5% of revenue in research and development, year after year, and committed around USD 400 million of strategic investments to assemble a complete chip-to-cloud technology stack. Each layer is strengthened by deep specialist capability namely PathPartner at the chip layer, Technica in E/E architecture and automotive Ethernet, Qorix in middleware, Helm.ai in autonomous-driving applications, N-Dream and Somit Solutions in cloud and after-sales, Caresoft in benchmarking and value engineering, and Cymotive in cybersecurity. By taking the focused expertise of these companies and scaling it across its global client base alongside an ecosystem of complementary semiconductor, Tier-1, and cloud partners KPIT offers what few competitors can: end-to-end ownership across the entire vehicle software stack.

This moat reaches clients through a fast-growing portfolio of solutions and products. KPITs solutions are AI-infused, outcome-based offerings that solve complex, multi-domain problems end-to-end, helping clients reach production faster, at lower cost, and with higher quality. Its products, offered through licensing and recurring-revenue models, span the full vehicle lifecycle from architecture and design through engineering, validation, manufacturing, and after-sales, with Beacon at their core.

Deep integration and validation expertise, a full chip-to-cloud stack built over years of investment, and Beacon binding it together with AI - together these set KPIT apart, and position it to capture the substantial long-term opportunity ahead.

KPIT is also changing how it engages with clients. The Company has shifted decisively from traditional time-and-material contracts towards fixed-price, outcome-based, and licensing models with more than 80% of new contracts now fixed-price in nature aligning its commercial model with the value it creates. It continues to deepen relationships within its strategic accounts through integrated, cross-practice, and cross-geography offerings, and added a notable number of new clients during the year across passenger cars, trucks, and off-highway.

FINANCIAL PERFORMANCE

REVENUE:

During this year, our $ revenue stood at $ 724.8 Million, a Y-o-Y growth of 4.8% against $ 691.4 Million in FY25. In

terms, revenue for the year was reported at 64,549.31 Million as against 58,423.45 Million in FY25, a Y-o-Y growth of 10.5%.

The passenger cars vertical contributed around 79.0% of the total revenues in FY26 whereas the commercial vehicles segment contributed around 18.1% of the revenues. In terms of geography, US contributed around 27.4%, Europe 48.0% and the balance 24.6% came from Asia. Europe led t functioning of the enterprise. By the growth followed by USA and then Asia.

Our Strategic Accounts contributed around 86.6% of the overall revenues and the growth in these accounts was close to 4.5%.

PROFITABILITY:

The EBITDA for FY26 stood at 20.8% as against 21.0% for FY25. The EBITDA for FY26 was 13,456.60 Million. The Net Profit for FY26 stood at 6,373.70 Million, a Y-o-Y decline of 24.1%.

SHAREHOLDERS FUNDS

The Shareholders Funds as at March 31, 2026 stood at

35,409.12 Million.

LIQUIDITY

The Cash Balance as at March 31, 2026 stood at 14,268.58 Million as against 15,864.73 Million as at March 31, 2025.

The DSO were at 47 days as at March 31, 2026 as against 44 days as at March 31, 2025 with our continued consistent focus on faster cash conversion.

As on March 31, 2026, the total debt on the books of the Company stood at 4,622 Million.

Thus, the Net Cash Balance as at March 31, 2026 stood at 9,647 Million as against 15,850 Million as at March 31, 2025, a net operational increase (without considering M&A payouts) of 7,148 Million.

EMPLOYEES

The total headcount for the Company stood at 12,520 as at the end of FY26 as against 12,873 as at the end of FY25. The Development Headcount was 11,703 as against 11,993 last year. The detailed update on People is covered under the Chairmans Letter.