Kaynes Technology India Ltd. reported mixed results for the first quarter of fiscal 2027, with brokerages flagging rising working capital and raised debt as key concerns.
Revenue Beats Estimates While Profit Falls
The company reported consolidated revenue of Rs. 946 crore, up 40.5% from the previous year. This figure exceeded analyst expectations of Rs. 863 crore, marking a strong showing in the top line. However, the bottom line did not follow suit.
Net profit declined 24.4% year-on-year to Rs. 56.4 crore, missing the Rs. 66 crore estimate. The drop occurred even as the company’s core EBITDA margin improved to 15.5% from 16.9% in the prior year. Despite this operational beat, the increase in employee expenses and other income, alongside a significant jump in tax outgo, weighed on the final numbers.
Cash Flow Pressures Mount
While revenue growth is encouraging, cash generation has become a significant hurdle. Net working capital days increased to 163 from 122 in the previous quarter, pushing net debt up to Rs. 800 crore from Rs. 200 crore. Smart-metering receivables also rose to Rs. 1,311 crore from Rs. 1,158 crore, adding to the balance sheet strain.
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These financial metrics are causing analysts to view the stock more cautiously. Kotak Institutional Equities maintained a ‘Reduce’ rating on the company, raising the target price to Rs. 3,550. The firm noted that the 25% profit decline versus estimates was a disappointment. JPMorgan kept its ‘Neutral’ stance but cut the target price to Rs. 3,600. Nuvama downgraded the stock to ‘Reduce’ after the recent rally, citing earnings risks.
Broader market conditions are complicating the outlook. The company expects FY27 to remain challenging, noting that the cost and supply environment has intensified to levels similar to the Covid-19 period. Management also delayed the operational timeline for its OSAT and PCB facilities, pushing the launch to the third quarter of FY27 rather than the second quarter.
Brokerage Reactions
Kotak Institutional Equities emphasized that the 40% year-on-year revenue growth was positive. However, the firm highlighted negative operating cash flow of Rs. 260 crore as a primary concern. JPMorgan pointed out that this was the first time in at least five quarters that both revenue and margins had beaten estimates. Both firms listed the delay in ramping up OSAT and PCB units as a factor for their outlook. Nuvama revised its FY27 and FY28 earnings estimates downward by 12% and 2%, respectively, to account for the missed quarterly results.
