Elara Capital retains BUY, but lowers TP on Kaynes Tech by 30%; key details

Elara Capital believes that the recent market reaction to Kaynes Technology accounting inconsistency was disproportionate and shall have no material impact on the company's earnings.

Domestic brokerage firm Elara Capital has retained its 'BUY' rating on Kaynes Technology on the belief that the market reaction to recent events seemed disproportionate to the scale of disclosure and accounting inconsistencies raised, and there won't be any material impact on growth prospects and earnings.  The report highlights that Kaynes Technology stock price corrected by 41 per cent over the last three months (19 per cent post Q2FY26 results and ~22 per cent after corporate governance issues were raised) as concerns over cash flow generation were compounded by inconsistencies in accounting disclosures.  As of date, Kaynes Technology has bounced back nearly 15 per cent from its recent low of ₹3,713 hit on December 9, 2025. On Monday, the stock traded with a gain of 2.5 per cent at ₹4,375 in early deals. 

Elara's rationale behind retaining 'Buy' rating on Kaynes Technology

  Apart from the adverse or so-called disproportionate, market reaction analysts at Elara Capital say that the strong growth prospects of the company make the stock a compelling 'BUY'.  Differences in goodwill reporting stem from differing opinions: Regarding the inconsistency in goodwill relating to the Iskraemeco acquisition, management clarified that the capital reserve arising from Iskraemeco of ~₹52.20 crore was netted off against goodwill arising from acquisition of Sensonic of ~₹51.10 crore, resulting in a net recognition of ~₹1 crore.  The purchase consideration paid to Iskraemeco also includes recognition of intangible assets of ₹115 crore for technical know-how. The differences in goodwill recognition stems from the differing opinion in valuing intangible assets and can be argued on both counts- for and against. The moot question is whether a sum of ₹51 crore has a material impact on financials and warrants a correction of ₹15,300 crore in the value of the firm. We believe it doesn't, said Elara Capital in its report.  ALSO READ | Elara Capital bets on JSW Infra's strategic expansion; upgrades to 'Buy'  No impact on growth; H2 sales better than H1: In FY25 (ex of Iskraemeco acquisition), H1 accounted for 33 per cent of sales, and H2 67 per cent. Elara expects a similar trend to continue in FY26.  The company has seen a strong 49 per cent growth in order book to ₹8,100 crore in Q2FY26 (inclusive of Iskraemeco order book). Hence, analysts at Elara believe that there should be no meaningful impact on EMS growth prospects for Kaynes.  Earning prospects: Elara expects Kaynes FY25-FY28 revenue and Profit after Tax (PAT) Compound annual growth rate (CAGR) at 47 per cent and & 49 per cent, respectively. The brokerage firm has also maintained its Earnings Per Share (EPS) target of ₹127.70 and values the stock at 42x FY27E P/E (vs. 70x earlier) with a revised Target Price (TP) of ₹5,365.  "Key monitorable deliverables for the Kaynes hereon is the ability to turn cash flow positive and reduce working capital days, absent which the potential for downside stays alive. Our base case is that the company will be able to resolve its cash flow issues by Q4FY26," said Elara Capital.  The revised TP for Kaynes Technology stock is 30 per cent lower when compared to the brokerage firm's earlier project TP of ₹7,670 per share.  ALSO READ | Capex revival, policy tailwinds to aid Siemens; Antique sees 20% upside 

Kaynes Technology stock on technical charts

  Technical chart shows that Kaynes Technology is seen trading below its key moving averages on the daily time-frame.  The short-term 20-day moving average (20-DMA) stands at ₹5,207; while the medium-term and the long-term 100-DMA and 200-DMA stand at ₹6,329 and ₹5,882, respectively. 

 

 

  _{Key levels: 20-DMA - ₹5,207; 110-DMA -  ₹6,329; 200-DMA - ₹5,882}  The key momentum oscillator - the 14-day Relative Strength Index (RSI) is seen bouncing back from oversold levels, with the indicator hitting a low of 11.69 in recent days. At present, the RSI stands at 31.5 levels.  Disclaimer: The views expressed by the brokerage/ analyst in this article are their own and not those of the website or its management. Business Standard advises users to check with certified experts before taking any investment decisions.