Shares of Kaynes Technology fell sharply after reporting a weaker-than-expected first quarter, highlighting margin challenges despite robust revenue growth and a growing order book as brokerages present mixed outlooks.
Kaynes Technology shares fell sharply on Monday after the electronics manufacturing services company reported a weaker-than-expected first quarter, even as revenue continued to grow at a strong pace. The stock touched an intraday low of Rs 3,531 on the BSE, after the company said net profit for the April-June period dropped 24.4% from a year earlier to Rs 56.4 crore, compared with Rs 74.6 crore in the same quarter last year. Revenue rose 40.5% to Rs 946 crore, but the stronger top line was offset by margin pressure and higher costs.
Operating performance remained solid on the surface, with EBITDA rising 29.5% to Rs 147.5 crore, but the EBITDA margin slipped to 15.6% from 16.7%. Gross margin also weakened, falling to 34.4% from 41.1%, as the company faced higher supply-chain, energy, commodity and foreign exchange expenses. Kaynes said its order book stood at Rs 8,900 crore at the end of June, up 20% from a year earlier and 6% from the previous quarter, leaving the order book-to-trailing 12-month sales ratio at 2.3 times.
Brokerages split over the outlook. Motilal Oswal kept a “Buy” rating and a target price of Rs 5,000, saying the company’s order book and growth across businesses support its longer-term prospects, with OSAT and PCB businesses expected to add to growth later in the year. Nuvama, however, downgraded the stock to “Reduce” and set a target of Rs 3,450, warning that near-term margin pressure and the share’s recent run-up leave little room for disappointment. Nomura stayed “Neutral” with a target of Rs 4,094, pointing to growth in auto, EV and industrial segments but flagging elevated working capital, heavy investment needs and execution risks as Kaynes scales newer businesses.
Kaynes has described FY27 as a difficult year, but says it expects to adjust more quickly than peers and see profitability normalise over the next few quarters. That message, however, was not enough to prevent a broad reassessment of the stock after a quarter in which sales growth remained robust but profitability showed clear strain.
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