Kaynes Tech Shares Plummet 8% Amid Weak Q1 Results: What Do Analysts Say?
In a shocking turn of events, shares of Kaynes Technology plummeted 8% to Rs 3,531 on the BSE on Monday, following the electronics manufacturing services firm’s weak Q1 results. The decline in net profit, revenue, and EBITDA margins has left investors worried about the company’s future prospects.
Weak Q1 Results: A Cause for Concern?
Kaynes Technology reported a 24.4% year-on-year decline in net profit for the April-June quarter, standing at Rs 56.4 crore. Revenue, however, jumped 40.5% YoY to Rs 946 crore from Rs 673.5 crore in Q1 FY26. Despite the revenue growth, the company’s EBITDA margin narrowed to 15.6% from 16.7%. The compression in gross margin, attributed to higher supply-chain, energy, commodity, and foreign exchange costs, has raised concerns about the company’s profitability.
Order Book Remains Strong
Despite the weak Q1 results, Kaynes Technology’s order book remains robust, standing at Rs 8,900 crore, up 20% YoY and 6% sequentially. The order book-to-trailing 12-month sales ratio remained stable at 2.3x. This suggests that the company has a strong pipeline of orders, which could drive growth in the coming quarters.
Analyst Views: Buy, Sell, or Hold?
Motilal Oswal maintained its ‘Buy’ rating on Kaynes Technology with a target price of Rs 5,000, implying around 30% upside from current levels. The brokerage expects the company to maintain strong growth momentum, supported by a robust order book and expansion into new businesses such as OSAT and PCB. However, Nuvama downgraded Kaynes Technology to ‘Reduce’ with a target price of Rs 3,450, citing near-term margin pressure and the stock’s sharp recent rally.
Nomura Retains Neutral Rating
Nomura retained its ‘Neutral’ rating on Kaynes Technology with a target price of Rs 4,094, implying 6.2% upside. The brokerage noted that revenue growth, excluding smart meters, picked up in Q1 FY27, led by the auto, EV, and industrial segments. However, elevated working capital, largely due to the smart meter business, remains a key monitorable.
Challenging Year Ahead
Kaynes Technology has described FY27 as a challenging year, but stated that it expects to respond to changing conditions more quickly than its peers. The company also expects profitability to normalise over the next few quarters. As investors wait for the company’s next set of results, it remains to be seen whether Kaynes Technology can regain its momentum and live up to its growth potential.
What’s Next for Kaynes Tech?
As the company navigates the challenging year ahead, investors will be keenly watching its ability to manage costs, drive revenue growth, and expand into new businesses. With a strong order book and a robust pipeline of orders, Kaynes Technology has the potential to bounce back and deliver strong growth in the coming quarters. However, the company’s ability to navigate the current market conditions and manage its profitability will be crucial in determining its future prospects.
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