Kaynes Tech’s revenue for the quarter stood at ₹946 crore, a growth of 40% from last year, and higher than the CNBC-TV18 poll figure of ₹866 crore. The company’s core businesses grew over 30% each, while its other smaller businesses grew between 70% to as high as 180%.
|
Kaynes Tech Segments |
YoY growth |
% sales |
|
Automobile |
+35% |
26 |
|
Industrial (incl EV) |
+31% |
55 |
|
Aerospace Outerspace & Strategic electronics |
+181% |
2 |
|
Medical |
+181% |
2 |
|
Railway |
+81% |
9 |
|
IoT/IT, Cons and others |
+69% |
6 |
The company’s Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) for the quarter stood at ₹147.5 crore, largely in-line with the CNBC-TV18 poll estimate of ₹130 crore and higher than last year’s figure of ₹113 crore.
EBITDA margins saw some pressure, narrowing to 15.6% from 16.7% in the year-ago period, but turned out to be better than the 15% estimate. With cost of goods rising to ₹620 crore from ₹396 crore during the quarter, the company’s gross margins narrowed to 34.4% from 41.1% last year. The management attributed the gross margin compression to supply-chain, energy, commodity and forex cost escalation.
At the end of the June quarter, Kaynes Tech’s order book stood at ₹8,900 crore, a growth of 20% from last year and 6% sequentially. Order book-to-trailing 12-month sales ratio remained stable at 2.3x. However, the average cash conversion cycle increased to 163 days from 122 last year.
Here are three key takeaways from the management’s earnings call:
The company has called financial year 2027 to be a tough year, but expects it to react faster to situations compared to its peers. It also sees profitability normalizing over the next couple of quarters.
Kaynes Tech’s smart metering business is likely to turn cash positive by the end of the year and it plans on issuing a detailed de-risking strategy in February next year, with service-to-product model clarity emerging by the third quarter.
The company is also in advanced, near-closing talks with one of the largest global Electric Vehicle manufacturers, the space business is targeting to launch a prototype satellite by mid-next year, and its two subsidiaries are entering the titanium-gas bottle supply for ISRO and DRDO.
Motilal Oswal Says “Buy” for 30% Upsisde:
Brokerage firm Motilal Oswal has maintained its “buy” rating on Kaynes Technology with a price target of ₹5,000, indicating an upside potential of 30% from current levels.
The brokerage said that with a robust order book, Kaynes is likely to sustain its strong revenue growth momentum going forward.
“Going forward, Kaynes’ growth will be driven by continued scaling of its core EMS business, with growth across all verticals. OSAT and PCB are expected to emerge as key growth engines, with commercialization targeted from the third and fourth quarter of FY27,” Motilal Oswal said, adding that the company’s expansion into space and defense electronics should further diversify its growth profile.
Motilal Oswal expects Kaynes Tech’s revenue to grow at a Compounded Annual Growth Rate (CAGR) of 41%, EBITDA CAGR of 44% and Adjusted. PAT CAGR of 52% over financial year 2026-2028.
However, to factor in the lower-than-expected results due to higher depreciation and tax, and lower other income, the brokerage has cut Kaynes’ financial year 2027 and 2028 Earnings Per Share (EPS) expectations by 11% and 5% respectively.
