Kaynes Tech Q1 FY26 results (Apr–Jun 2025) and concall

So we maintain our what I call the guidance of INR4,500 crores plus on a consol basis. And we've also seen an upward movement in the EBITDA number. As you know, from first quarter itself, we probably are having a product profile, which is leading us to a higher EBITDA. So we could expect a similar thing going forward for the entire year. So you can expect in FY '26, a positive OCF and significantly positive OCF, not just barely crossing the threshold.

Analyst questioned the achievability of the FY26 revenue guidance given Q1 growth, and management reaffirmed the target and projected strong OCF.

Asked by Nitin Arora

Yes. So fundamentally, what happens is the debtors, as you know, the April typically is a very muted quarter. So first quarter, May, always, you'll see a bit of a spike, especially on a growth trajectory, a bit of a spike in the working capital because a lot of billing so April is smaller month than May, May is smaller than June. June is a fantastic month, then you'll see July is bigger than June. So all through the year, from April to the next March, every month-on-month, there is an increase.

Analyst probed the increase in working capital days and the reasons for slower Q1 growth in automotive, which management attributed to seasonal billing patterns and a temporary spike in receivables from an acquisition.

Asked by Ankur

So we already have explained to you that we have 2 major clients. One is an American client. I think most of you know, who they are, [QAS 0:27:28] and the other is our own Indian client, who has acquired the Japanese business. And we have a third client, which has been lined up now. And it's a German client. And so from the perspective of business, I think we now have a good, let's say, mix of businesses from 3 different countries. And so, this is pretty much better than what we had expected. The construction is well on its way. And by the first week of August, at least the first building will be ready, along with the design office and so on.

Analyst sought detailed updates on the OSAT facility, including client acquisition, construction progress, and commercialization timeline, which management provided with specific dates and client types.

Asked by Sonali Salgaonkar

So we have taken an omnibus kind of, let's say, definition for our investments. But broadly, we would like to go more and more into the area of inorganic acquisitions. They are on three fronts. One is in the geography front. And then the second is, of course, we want to strengthen our design portfolio. We have done some small, small investments like we have talked about it earlier also. We always do a small investment first as a test and then we probably add more to it.

Analyst inquired about the strategic deployment of recently raised capital, and management outlined a three-pronged approach focusing on inorganic acquisitions for geographic expansion, design portfolio strengthening, and backward integration.

Asked by Manish Ostwal

Yes, yes. So the margin expansion is a direct consequence of two factors. One factor is the gross margin, which has something to do with the material cost reduction vis-a-vis the pricing. And the second one is what is called operating leverage. So you will see both of these in action. We have -- like I said, there are, of course, more business in portfolios, where there is better margins. That is a significant contribution to increase in EBITDA number.

Analyst questioned the reasons behind the significant margin expansion and its sustainability, with management attributing it to gross margin improvements from cost reductions and better pricing, as well as operating leverage.

Asked by Vipraw Srivastava

Yes. So the other noncurrent items, which is INR390-odd crores, plus INR858 crores is our regular receivables, which is based on our regular business and a tad higher because the profile of sales keeps going up. So April sales is lower than May, May is lower than June, June is lower than July like that.

Analyst sought clarification on the absolute value of receivables, including the extraordinary INR350 crores from an acquisition, and management explained the breakdown and seasonal factors.

Asked by Nikhil Kale

So smart meter, like we said, we are aiming at about 15% of the total market. And every year, we definitely minimum INR1,000 crores to INR1,200 crores of business we should probably end up doing in that area... As far as aerospace is concerned, lots of new orders have come in... As far as railway is concerned, with Kavach project, Rameshji mentioned, we are into pilot phase.

Analyst asked for updates on the ramp-up and outlook for key growth segments, and management provided specific targets and progress updates for smart meters, EV, aerospace, and railway.

Asked by Siddhartha Bera

For OSAT, actual spend so far is about INR313 crores. We have another INR443 crores balance, which we have raised in the QIP. Similarly, for PC board, about INR114 crores have been spent. And of course, we have -- we will have some left this year. So what happens is in the land and buildings, the government funding is not too much. It's all the plant and machinery normally. And so plant and machinery orders have been placed. The moment they come, we'll start getting government funding.

Analyst inquired about the specific capital expenditure incurred on the new OSAT and PCB plants and the mechanism for receiving government subsidies, which management clarified with figures and funding triggers.

Asked by Praveen Sahay