Kaynes tanks 19% as Q3 revenue growth moderates; stk down 46% in Jan so far

The company reported revenues of Rs 509 crore, up by 30% YoY, and 15.6% QoQ as against a run-rate of around 60% 9MFY25

Shares of Kaynes Technology India tanked 19 per cent to Rs 4,256.95 on the BSE in Tuesday’s intra-day trade after the company reported a relatively modest growth compared to its current runrate due to demand slowdown. 

 

The company reported revenues of Rs 509 crore, up by 30 per cent year-on-year (YoY), and 15.6 per cent quarter-on-quarter (QoQ), as against a run-rate of around 60 per cent 9MFY25. The company reported around 62 per cent revenue compound annual growth rate (CAGR) over FY21-24.

 

With today’s fall, the stock has plunged 46 per cent from its record high of Rs 7,824.95, touched on January 1, 2025. However, in the previous calendar year (2024), it had zoomed 184 per cent, as compared to the 8 per cent rise in the BSE Sensex. It had skyrocketed nearly 13 times, or 1,163 per cent, against its issue price of Rs 587 per share. Kaynes made its stock market debut on November 22, 2022.

 

Meanwhile, the company’s earnings before interest, tax, depreciation and amortisation (Ebitda) margin stood at 14.2 per cent during the quarter, compared to 13.7 per cent in Q3FY24. For 9MFY25, margin was at 14.0 per cent. The company's profit after tax (PAT) was reported at Rs 66.50 crore which is 47.1 per cent higher YoY, and 10.5 per cent higher QoQ. For 9MFY25, the company posted a 74 per cent YoY jump in PAT at Rs 177.4 crore.

 

Kenes Tech's management said the company’s orderbook stood at Rs 6,047 crore as of December 31, 2024, providing strong revenue visibility for FY25 and beyond. The company continues to invest in high potential and high margin segments, and expects these to help sustain the growth momentum and make Kaynes a differentiated player in this segment, the management said.

 

Kaynes is a leading end-to-end and IoT solutions-enabled integrated electronics manufacturer in India, having capabilities across the entire spectrum of Electronics System and Design Manufacturing (ESDM) services. The company enjoys established relationships with reputed customers across industries. It caters to a diverse client base across multiple sectors, ranging from companies in the industrial, automotive and railways sectors to medical, aerospace and defence players, among others. 

 

Kaynes has showcased its aggressive capabilities across the entire spectrum of ESDM services. It has been consistently adding customer base across industries and geographies, with a specific focus on high growth - high margin segments. However the stock trades at a rich valuation of PE ~55x its FY27E EPS, leaving marginal room for error. Q3 performance was subpar while management commentary is awaited for outlook, ICICI Securities said in a note.

 

Motilal Oswal Financial Services expects Kaynes to continue its robust earnings momentum on the back of a strong revenue growth supported by a large order book and continuing robust order inflows and margin expansion driven by the rising share of high-margin businesses coupled with operating leverage. According to the brokerage firm, key risks for the company include an increase in working capital needs that can deteriorate cash flows, supply chain issues that can hamper business operations, and a delay in order execution that can moderate its growth trajectory.

 

Meanwhile, Kaynes’s proposed capex towards outsourced semiconductor assembly and test (OSAT) and printed circuit board (PCB) projects, coupled with the recent acquisition of Iskramaeco India Private Limited (IIPL) are expected to bring additional sources of revenue.

 

However, the company’s business is highly working capital-intensive, characterised by increased inventory requirements and a long receivables cycle. Going forward, the incremental working capital requirements amid the expected healthy growth and large planned capex as well as its impact on the company’s overall debt levels will be a key rating monitorable, according to ICRA.

 

A major portion of Kaynes's raw material requirement is imported from Singapore, China, Hong Kong, the US and other countries, owing to the unavailability of the required raw materials in bulk quantities in India. The company imports 55-60 per cent of its raw materials, thus exposing it to risks of forex volatility.  However, the company derives some portion of its revenue from exports (~10 per cent in FY2024), which provides a natural hedge to a certain extent, the rating agency had said in a rationale note dated November 22, 2024.