KPIT Technologies shares plunged more than 16 percent on Wednesday after the company warned its June quarter revenue will come in weaker than expected. The Pune-based auto technology firm blamed a sudden slowdown in orders from European carmakers.

KPIT said it expects reported revenue in U.S. dollar terms to decline roughly 1 percent year on year for Q1 FY27. The weakness showed up only in the final weeks of the quarter, catching the company’s own earlier guidance off guard.

BMW and Volkswagen cuts hit hard

The slowdown traces back to spending cuts at BMW and Volkswagen, two of KPIT’s largest European clients. BMW alone accounts for close to 12 percent of KPIT’s total revenue, which explains why a pullback from just one customer moved the whole quarter’s numbers.

KPIT builds software for connected and autonomous vehicles, a business tightly linked to how much European automakers are willing to spend on new engineering programs. When that spending pauses, KPIT feels it fast.

Margins take a bigger hit than revenue

The company said both EBITDA margin and net profit margin will fall sequentially, by a wider margin than the revenue decline itself. There was no time left in the quarter to cut costs to match the lower sales, since the weakness only became clear in the final stretch.

That combination, a demand miss layered onto a margin miss, is what rattled investors most.

JPMorgan cuts its rating and target

JPMorgan downgraded KPIT to underweight and cut its price target to Rs 550 from Rs 700. The bank also trimmed its FY27 to FY29 revenue estimates by 5 to 8 percent.

JPMorgan lowered EBITDA margin forecasts by up to 270 basis points and cut earnings per share estimates by 9 to 22 percent. The stock’s slide put it near a 52-week low, wiping out much of its gains from earlier in the year.

KPIT now has to prove the European slowdown is temporary, not the start of a longer downturn in auto engineering spend.