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KAKAYNES

Kaynes Tech Q2 FY26 results (Jul–Sep 2025) and concall

Capital Goods · Concall AI · Call held 8 Dec 2025

Company page: Kaynes Tech share price, financials & guidance record

Source transcript

Management summary

Kaynes Technology held a conference call to address an analyst report questioning its accounting practices and disclosures. Management clarified that most observations were misinterpretations or minor errors, asserting no governance issues. The company highlighted robust growth in non-smart meter segments, progress in OSAT client acquisition, and ongoing efforts to improve working capital and compliance, while providing specific financial details for past periods and segment-wise guidance.

Highlights

  • FY25 revenues reached INR2720 crores, marking a 51% year-on-year increase.

  • H2 FY25 saw a net margin of 9% on revenues of INR532.7 crores, yielding a PAT of INR48.9 crores.

  • The company has acquired three new OSAT clients, with samples shipped and commercial production initiated.

  • Strong growth is observed across diverse verticals including automotive, industrial, electric vehicles, railways, and aerospace.

  • Management is actively working on working capital normalization, expecting visible improvement through supply chain finance, factoring, and inventory optimization.

Concerns

  • An analyst report highlighted 'inconsistencies' and 'ambiguities' in disclosures, which management attributed to minor errors and misinterpretations.

  • H1 FY25 experienced a loss due to significantly lower revenue (INR85.1 crores), provisions from due diligence, and corporate cleanup.

  • Working capital intensity remains typical for the EMS industry, though improvement measures are underway.

  • Contingent liabilities increased to INR520 crores (18% of net worth) in FY25, up from INR270 crores (11% of net worth) in FY24.

Key financials

3 periods

Headline

  • Smart Metering H1 FY26 Revenue
    ₹500 Cr

H2

  • FY25 Net Margin
    9%
  • FY25 Revenue
    ₹532.7 Cr
  • FY25 PAT
    ₹48.9 Cr

FY25

  • Revenue
    ₹2,720 Cr
    YoY +51%

What they filed

Q2 FY26: revenue up 7.9%, net profit up 0.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26
Revenue433 396 737 451 467 +8%
EBITDA73 49 84 65 63 −14%
Net profit63 38 60 54 63 +0%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Order book

low confidence

Composition

  • Smart Metering (product)
  • Automotive (segment)
  • Industrial (ex-Smart Meter) (segment)
  • Electric Vehicles (segment)
  • Railways (segment)
  • Aerospace (segment)
  • OSAT Clients (client type)
The company is seeing strong growth in various segments, with new orders for devices and OSAT clients, while the smart meter business's contribution is expected to decline as a percentage of total business.

Source: Q&A

Capital allocation

high confidence
  • Capex Capex disclosed QIP, internal accruals, transitory debt, and central government subsidy
    • OSAT balance requirement ₹1,030 Cr
    • PCB total plan ₹1,400 Cr
    • FY25 fixed asset purchase (PPE, CWIP, Capital WIP, intangibles, ROU assets) ₹950 Cr
    balance requirement for OSAT INR10.3 billion will be funded through QIP and spent amount of about 3.8 billion and balance internal accruals capex spread over five years and some transitory debt. Second thing is that with regard to PCB, the current plan includes only capex of 14 billion for which the balance requirement is 3.2 billion and up central government subsidy of about 3 billion... The same will be funded through QIP and spend amount of 1.6 billion internal accruals and debt... Our response is the purchase of fixed assets in the cash flow statements amounting to 9.5 billion includes 7.8 billion of PPE, CWIP, Capital WIP that is, intangibles after adjusting for capital advances and payable of capital goods. INR1.7 billion of right of use assets, ROU assets, net of subsidy.
  • Debt Debt disclosed Cost 10%
    The interest cost will work out approximately 10% including all bills discounted.
  • Liquidity Liquidity disclosed Working capital normalization measures are underway, including supply chain finance, factoring, and bill discounting, to improve liquidity.
    Working capital normalization measures are already underway and expected to show visible improvement going forward... including collaborating with onboarding large customers into supply chain finance program, leveraging factoring and bill discounting and driving inventory optimization.

Guidance & targets

Revenue

  • Smart Metering Business Revenue Revenue · H1 FY26 · High confidence ~INR500 crores
    As of end of September, the total receivables, including other non-current assets, INR687. Revenues will be of the order of about INR500-odd crores in the first half.

    — Jairam Sampath

  • Smart Metering Business Revenue Revenue · H2 FY26 · High confidence ~INR300 crores
    And then, of course, in the second half, we also plan some execution, which will be of the nature of about INR300-odd crores. So, these are the numbers as far as the smart metering business is concerned.

    — Jairam Sampath

  • OSAT Revenue from New Clients Revenue · FY27 onwards · Medium confidence good revenues
    approval from these three customers will help us to do good revenues, starting from FY '27 onwards.

    — Jairam Sampath

Business Mix

  • Reliance on Smart Meter Business Business Mix · going forward · High confidence will certainly come down
    So going forward, the reliance on this particular thing will certainly come down. And then, of course, it's getting replaced by equally good and worthy businesses.

    — Jairam Sampath

What to watch in Q3 FY26

Working Capital Normalization

going forward
Current Underway, typical for EMS industry
Target Visible improvement

Why it matters

Improvement in working capital is crucial for enhancing cash flow and operational efficiency.

Working capital normalization measures are already underway and expected to show visible improvement going forward.

Find out whether KAYNES delivers this. Inve re-checks your case every morning.

Risks & concerns

  • Accounting Disclosures and Transparency

    medium

    An analyst report highlighted 'inconsistencies' and 'ambiguities' in disclosures, which management clarified as minor errors in reporting notes to accounts, not governance issues.

    Analyst acknowledged

  • Working Capital Intensity

    medium

    The EMS industry typically has high working capital intensity, which the company is addressing through various initiatives like supply chain finance and factoring.

    Management acknowledged

  • Near-term Free Cash Flow from EMS Business

    medium

    The EMS business is not expected to generate free cash flow in the near term as capital is being reinvested for growth.

    Management acknowledged

  • Increased Contingent Liabilities

    low

    Contingent liabilities increased to INR520 crores (18% of net worth) in FY25, primarily due to performance bank guarantees for Iskraemeco projects and corporate guarantees for subsidiaries.

    Analyst explained

Q&A highlights

7 direct
Analyst Report Observations and Accounting Practices Direct
We acknowledge that a few disclosures required clearer clarification and articulation. These were errors in reporting of disclosure in notes to accounts and not lapse of intent, governance or conduct. The management acted immediately... there are no governance concerns and no underlying deterioration in business.

Management directly addressed the core concerns of the analyst report, clarifying that issues were disclosure-related errors, not fundamental governance or business problems.

Promoter Stake Dilution Plans Direct
At this point in time, we have not been informed by the promoters of any further dilution of the stakes or anything... promoter stakes today stand at around 52%, 53%. They continue to remain this over the horizon that we can see and there is also no requirement to do that dilution by even any fundraise of that nature, at least in the near term.

Clarifies that there are no immediate plans for further promoter stake dilution, addressing investor concerns about ownership stability.

Asked by Harinder Singh

Receivables Breakdown and Smart Meter Order Book Partial
As far as the specific order number for this, we don't normally publish order book by customer for the sake of confidentiality... the total receivables is about - yes, of the total receivables, about INR687 crores pertains to business of smart meters, which includes also the other non-current assets portion. So, we are quite confident that INR240 crores... will anyway get discounted and it'll reduce the amount.

Management provided some quantification for smart meter receivables and plans for discounting, but declined to give customer-specific order book details due to confidentiality.

Asked by Siddhartha Bera

Impact of Working Capital Initiatives on Margins Direct
I don't see any adverse impact of these steps that we are taking, including the ones which we are trying to do, factoring and these things. We have done the math and it's not significantly altering the financials.

Reassures investors that efforts to improve working capital, such as factoring and bill discounting, will not negatively impact the company's net profit.

Asked by Sameet Sinha

R&D Capitalization Policy Direct
Only when we identify a particular product with a revenue stream possibility, we take it as development and that is capitalized. And until the time when we start the revenue cycle, the moment revenue cycle comes, then amortization will start. So, it's a very practical way of not recognizing things which are experimental in nature and recognizing things which are actually developmental in nature.

Provides clarity on the company's R&D accounting policy, distinguishing between experimental work (expensed) and product development (capitalized).

Asked by Keshav Lahoti

Free Cash Flow Generation from EMS Business Direct
from EMS business, we don't contemplate that there'll be any free cash flow, operating cash flow for sure... FCF, I'm not sure in the near-term that will happen because we'll have to reinvest for growth.

Sets realistic expectations for free cash flow generation from the core EMS business, indicating that growth reinvestment will consume cash in the near term.

Asked by Achal Lohade

Iskraemeco H1 FY25 Impairment Details Direct
we had instructed them to take a write-off of inventory which are not usable in the new generation of products, etcetera... about INR44 crores of write-off of inventory on their books. And of course, there was a small quantum about other expenses, roughly about INR6 crores. So this put together was about INR50 crores.

Quantified the specific write-offs and expenses that contributed to Iskraemeco's H1 FY25 loss, providing transparency on the acquisition's initial financial impact.

Asked by Renu Baid Pugalia

Transition from AMISP to Product Solution for Smart Meters Direct
No, no, no. We are working on AMISP model... But all the other ones are all based on our EMS type of model wherein there is a definitive period for payment. It is not extended beyond one year. So other than PGCIL contract, all other contracts are all non-AMISP, which you can say that after we have taken over many new orders that have come in all from non-PGCIL book direction is all non-AMISP type of.

Clarified the company's evolving strategy for the smart meter business, indicating a shift towards a device manufacturer model for new orders, reducing reliance on the AMISP model.

Asked by Manikantha Garre

2 min read 6 chapters

Detailed narrative

Response to Analyst Report & Compliance Improvements

Kaynes Technology convened this call to address an analyst report that raised concerns about its accounting disclosures. Management clarified that the observations were primarily due to 'errors in reporting of disclosure in notes to accounts' and 'not lapse of intent, governance or conduct.' They emphasized that there are 'no governance concerns and no underlying deterioration in business.' The company has already rectified the noted disclosure errors and is strengthening internal compliances, audit review processes, and disclosure checks to prevent future occurrences.

Business Performance and Growth Drivers

The company reported FY25 revenues of INR27.2 billion, reflecting a significant 51% year-on-year increase. While the smart meter business's contribution is expected to trend down as a percentage of total business, other verticals such as automotive, industrial, electric vehicles, railways, and aerospace are demonstrating strong growth.

Management noted 'many orders, significant orders' for devices and has secured three new OSAT clients, with samples shipped and commercial production initiated, aiming for 'good revenues, starting from FY '27 onwards'.

Capital Expenditure and Funding Strategy

Kaynes Technology has substantial capex plans, including a balance requirement of INR10.3 billion for OSAT and a total plan of INR14 billion for PCB. Approximately INR3.8 billion has been spent on OSAT and INR1.6 billion on PCB. These investments are primarily funded through a mix of QIP, internal accruals, and transitory debt, with central government subsidies expected for PCB.

Management indicated that free cash flow from the EMS business is not anticipated in the near term as profits will be reinvested for growth.

Working Capital Management and Efficiency

Acknowledging that 'working capital intensity is typical to the EMS industry,' Kaynes Technology is implementing several initiatives to improve its working capital cycle. These include collaborating with large customers on supply chain finance programs, leveraging factoring and bill discounting, and optimizing inventory. Management expects these measures to lead to 'visible improvement going forward' and stated that the associated costs will not 'significantly alter the financials'.

Iskraemeco Acquisition and Financial Impact

The acquisition of Iskraemeco involved recognizing INR1.15 billion in intangible assets (customer contracts/technical know-how) and resulted in a net negative goodwill of INR10.31 million in consolidation. Management clarified that an H1 FY25 loss was primarily driven by 'significantly lower revenue' (approximately INR85.1 crores), provisions arising from Kaynes' due diligence (including INR44 crores in inventory write-offs), and broader corporate cleanup.

The H2 FY25 period, without these burdens, saw revenues of INR532.7 crores and a PAT of INR48.9 crores.

Contingent Liabilities and Guarantees

Contingent liabilities increased to INR5.2 billion (18% of net worth) in FY25, up from INR2.7 billion (11% of net worth) in FY24. This rise is attributed to INR1.9 billion in performance bank guarantees issued for Iskraemeco projects and INR1.3 billion in corporate guarantees for subsidiary companies.

Management stated these guarantees are 'necessitated by funding requirements of the subsidiaries for ongoing businesses' and are not indicative of underlying financial weakness.

Summary of a publicly available earnings call transcript; see how call summaries are prepared. Not investment advice.