Detailed Narrative
Robust 9M FY26 Financial Performance Despite Execution Challenges
Kaynes Technology delivered a strong financial performance for the nine months ended December 31, 2025, with total revenue reaching INR 2,383.7 crores, marking a 37% year-on-year growth. Operational EBITDA surged by 55% to INR 377.8 crores, leading to a 190 basis points expansion in EBITDA margin to 15.9%. However, management noted a 20% shortfall against their internal plan, attributing it to project alignment issues, inventory holding, and delays in agency approvals, which impacted revenue recognition despite a healthy order book.
Strategic Expansion in OSAT and HDI PCB Manufacturing
The company is actively pursuing its long-term growth strategy through significant investments in OSAT and HDI PCB manufacturing. The OSAT facility in Sanand is now operational and has successfully secured FSA approval, which is critical for availing 50% central and 20% state government subsidies on allowable capex. Concurrently, a new HDI PCB multilayer facility is being established in Chennai, targeting high-end complex PCBs for sectors like defense and aerospace, with an estimated business potential of INR 15,000 crores for the group.
Working Capital Management and Cash Flow Improvement Initiatives
Working capital days remained elevated at 139 days, 23 days higher sequentially, primarily due to increased receivables (INR 1,249 crores) and inventory (INR 1,226 crores). To address this, management aims to reduce net working capital to 85 days by March 2026, leveraging higher Q4 revenues, strategic inventory management, and the implementation of supply chain finance for receivables. The company expects consolidated operating cash flow to turn positive by the end of FY26, with a long-term vision for positive OCF across EMS, OSAT, and PC Board segments by FY28.
Revised FY26 Guidance and Q4 Outlook
Kaynes Technology revised its FY26 revenue guidance downwards from INR 4,400 crores to INR 4,100 crores, reflecting the impact of execution delays and deferrals, including a significant INR 3 billion Kavach order. To achieve the revised annual target, the company anticipates a minimum Q4 FY26 revenue of INR 1,700 crores. The smart metering business is projected to contribute INR 700-800 crores to FY26 revenue and is expected to grow at 30% year-on-year, with a strategic shift towards an ODM device model to mitigate long-term receivable risks.
Diversified Order Book and Segmental Growth Drivers
The company maintains a highly diversified order book of INR 9,000 crores, with no single customer contributing more than 6% of the overall turnover, ensuring reduced concentration risk. While industrial revenues experienced a temporary decline, other segments such as automotive, EV, and aerospace are showing strong growth, contributing to a 40% core business growth (excluding metering) for the nine months ended December 2025. The ODM share in the order book, currently at a minimum of 20%, is expected to increase by 5-7 percentage points, with a long-term target of 40% ODM for the pure EMS business by 2030.