Kaynes Tech — Q3 FY26 earnings call

Call held 6 Feb 2026

Management summary

Kaynes Technology reported strong 9M FY26 financial growth with revenue up 37% and EBITDA up 55%, driven by a robust INR 9,000 crore order book. Strategic initiatives in OSAT and HDI PCB manufacturing are progressing, with key approvals secured. However, execution delays and elevated working capital impacted performance, leading to a revised FY26 revenue guidance of INR 4,100 crores, down from INR 4,400 crores.

Highlights

  • 9M FY26 Revenue of INR 2,383.7 crores, up 37% YoY, demonstrating strong top-line growth.

  • 9M FY26 Operational EBITDA of INR 377.8 crores, up 55% YoY, with EBITDA margin expanding 190 bps to 15.9%.

  • Order book of INR 9,000 crores provides strong revenue visibility, with monthly order inflow growing 11.5% and the order book itself growing 50%.

  • OSAT facility at Sanand is operational and has secured FSA approval, which will enable 50% central and 20% state government subsidies on allowable capex.

  • New PCB HDI multilayer PCB facility in Chennai is progressing, targeting high-end complex PCBs and offering a business potential of INR 15,000 crores for the group.

Concerns

  • Execution delays led to a 20% shortfall against plan, widening the gap between order book and revenue recognition.

  • Working capital days were elevated (23 days higher sequentially) due to higher receivables (INR 1,249 crores) and inventory (INR 1,226 crores).

  • The INR 3 billion Kavach order was deferred due to a design revision, impacting near-term revenue recognition.

Key financials

  1. Total Revenue ₹2,383.7 Cr +37%YoY
  2. Operational EBITDA ₹377.8 Cr +55%YoY
  3. EBITDA Margin 15.9% +1.9%YoY
  4. PAT ₹272.6 Cr
  5. PAT Margin 11.4%

What they filed

Q1 FY27: revenue up 40.6%, net profit down 25.3% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue572 661 984 673 906 +58%804 +22%1,243 +26%946 +41%
EBITDA82 94 168 113 148 +80%119 +27%194 +15%148 +31%
Net profit60 66 116 75 121 +102%77 +17%91 −22%56 −25%
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

high confidence

Total value

₹9,000 Cr

as of 2025-12-31 quantified

50% YoY

Execution

typically a 12-month rolling forward basis, represents about 1.5 years' worth of orders

Composition

  • ODM Products (product) 20%

Cancellations & deferrals

  • deferred: Railways Kavach order deferred due to design revision for better field performance.
Order books are non-cancellable, but execution can be delayed due to project alignment, inventory holding, and agency approvals, leading to a 20% shortfall against plan.

Source: Prepared remarks

Capital allocation

high confidence
  • Capex Capex disclosed OSAT capex eligible for 50% central and 20% state government subsidies; PC Board has written commitments for state government subsidy and central government subsidy from ECMS program.
    • OSAT facility total capex ₹3,200 Cr
    • PC Board facility total capex ₹1,400 Cr
    • Phase 1 OSAT capex ₹1,700 Cr
    • Phase 1 PC Board capex ₹1,400 Cr
    So, for whatever numbers we have committed, we are not going to implement any more capex in the EMS business. Other businesses, there is already a DPR, the INR3,200 crores is the total capex for OSAT, INR1,400 crores is the total capex for PC Board. And OSAT, Rameshji mentioned saying that no FSA has been signed. So, we are assured of that's 50% central and 20% state government subsidies on the allowable capex. ... And similarly, here also in the PC Board also, we have got the factory going, and we have received written commitments from government on how much state will give. And then as part of the other earlier program, ECMS program now, there is a subsidy available from central government, too.
  • Liquidity Liquidity disclosed Holding company level is almost cash positive (minus INR 55 crores) and consolidated OCF is expected to be positive by year-end. Significant OCF positive is expected from EMS, OSAT, and PC Board by FY28.
    So fundamentally, actually, we kind of missed scoring a goal here. We are almost cash positive in the holding company level, which has never happened in the past. ... We are just about minus INR55 crores. We could have probably improved that too. And going forward, at consol level, we'll definitely be OCF positive by end of this year. ... So, this year, you can expect at consol level, definitely a significant positive operating cash flow. ... And at total company level, definitely, FY '28, you can look forward to a significant OCF in each of the businesses, EMS, OSAT as well as PC Board. So, you will get positive cash flow in all the 3.

Guidance & targets

Profitability

  • Net Working Capital Days Profitability · by March '26 · High confidence 85 days

    From 139 days today

    And secondly, we maintain our guidance of bringing down the net working capital to 85 days by March '26. So, could you help us understand exactly what journey or what steps will be embarked upon to bring that down because this seems like a sizable shift from 139 to 85 days within a quarter?

    — Jairam Sampath

Revenue

  • FY26 Revenue Revenue · FY26 · High confidence INR 4,100 crores

    Previously INR 4,400 crores → INR 4,100 crores

    Sir, last year also, we have guided INR3,000 crores of revenue and end up INR2,700 crores. And in the beginning of the year, we guided at INR4,400 crores, now we are targeting INR4,100 crores.

    — Manish Ostwal

  • Q4 FY26 Revenue Revenue · Q4 FY26 · High confidence INR 1,700 crores minimum
    Yes. So that is correct. And also, the industrial down because of less reliance on smart meter does not mean that we don't want to deliver those, but it's just that it so happened that other businesses also fired up. So, we are getting back to our old, let's say, diversified portfolio approach, wherein we have almost 4 to 5 verticals individually firing up. So hopefully, the fourth quarter we'll have INR300 crores of smart meter, but the remaining will come from our traditional businesses, which includes railways, aerospace, automotive and other industrial, non-smart meter-based industrial, electric vehicles and so on.

    — Jairam Sampath

  • Total Revenue Revenue · FY28 · High confidence $1 billion
    My question was primarily longer term. I mean, you reiterated your $1 billion guidance for fiscal '28. So basically doubling from where you are right now, slightly more than double. Can you break it up for us? Obviously, things have changed a lot in the last 9 months since you initially gave guidance. But how much of that is the core EMS, August, smart meters? Can you bridge that for us? Because I'm getting like a number like a 30% organic growth rate. So, if you can shed some light on that, like what are the key drivers of that growth?

    — Ramesh Kunhikannan

  • OSAT Business Revenue Revenue · High confidence INR 1,500 crores minimum
    So, at the minimum, you can expect INR1,500 crores from our OSAT business. Similarly, you can expect about INR1,000 crores from PC Board business.

    — Jairam Sampath

  • PC Board Business Revenue Revenue · High confidence INR 1,000 crores minimum

    — Jairam Sampath

  • FY26 Smart Metering Business Revenue Revenue · FY26 · High confidence INR 700-800 crores
    So, from the perspective of percentage of sales for the last quarter, you will have about INR300 crores of this business coming in, which will total up to about between INR700 crores and INR800 crores of smart metering business for the year.

    — Jairam Sampath

Growth

  • Smart Metering Business Growth Growth · year-on-year · High confidence 30%
    Going forward, this number will be going up because there are many AMISPs who will have to buy from people like us, people like Schneider, who are supplying as devices. My own peers are also supplying meters as devices. So the market demand is so high for the next 4, 5 years, year-on-year, there will be a growth of around 30%.

    — Ramesh Kunhikannan

Order Book

  • ODM Share in Order Book Order Book · going forward · High confidence increase by 5-7 percentage points

    From 20% minimum today

    No, it will be higher, sir. The things like Kavach will start coming in. So, they will come in chunks. So, it will be higher than that. I'm saying what currently in the order book is a minimum. That's something committed already. Once the correct version of Kavach is there in the field, we'll start buying material for that, and we'll start recognizing the orders in our order book. So that's a minimum. It can go up by about 5%, 7 percentage points going forward.

    — Jairam Sampath

Market Share

  • Pure EMS Business ODM Target Market Share · by '30 · High confidence 40%
    And on those only, sir, your ambition of taking it to 40% by '30, do you count your OSAT and PCB into your ODM? Or do you count that separately your pure EMS business should go to 40% ODM?

    — Naushad Chaudhary

Market context

  • Consolidated Operating Cash Flow Profitability · by end of this year · High confidence positive
    So going forward, what will happen is the throughput of sales will increase. So, your inventories and also, we are putting in place some supply chain finance activities. So, receivables also will yield results. And there are some outstanding items which we have been talking about like the other noncurrent assets. So, we will deal with that, too. So, this year, you can expect at consol level, definitely a significant positive operating cash flow.

    — Jairam Sampath

  • OCF from EMS, OSAT, PC Board Profitability · FY28 · High confidence positive
    And at total company level, definitely, FY '28, you can look forward to a significant OCF in each of the businesses, EMS, OSAT as well as PC Board. So, you will get positive cash flow in all the 3.

    — Jairam Sampath

What to watch in Q4 FY26

Net Working Capital Days

by March '26
Current 139 days
Target 85 days

Why it matters

Reduction in working capital is crucial for improving cash flow and operational efficiency, a key management commitment.

And secondly, we maintain our guidance of bringing down the net working capital to 85 days by March '26.

Risks & concerns

  • Execution delays and project alignment issues

    medium

    Project alignment problems, inventory holding, and delays in agency approvals can lead to a 20% shortfall against revenue plans, as seen with the Kavach order.

    Management acknowledged

  • Elevated working capital and receivables

    medium

    Working capital days are currently elevated (139 days) due to higher inventory and receivables, impacting cash flow, though management has a plan to reduce it to 85 days.

    Management acknowledged

  • Challenges of high growth rates

    low

    Management noted that growing at very high rates is 'not very comfortable' and involves 'some little bit of pain,' indicating potential operational challenges.

    Management acknowledged

Q&A highlights

6 direct
Order book execution vs. revenue growth Direct
If you look at it, our order books are not cancellable. These order books, we have lead times, but customers don't take our products unless their entire project is aligned. So in a project when there is a slight alignment problem, then they hold certain inventories. So that is where the catch is. Then there are occasions where we have not yet got approvals from various agencies for starting deliveries and things like that. That is why against our plan, there is a shortfall of around 20%.

Analyst challenged the widening gap between strong order book and revenue, and management provided specific reasons for execution delays and a quantified shortfall.

Asked by Siddhartha Bera

Working capital days reduction plan Direct
So, we will end up number of days improvement in terms of net working capital will show up just based on inventory alone. plus, of course, we are also taking some steps in the receivables area. And a lot of execution will happen in the fourth quarter, which is in the supply chain finance-based execution. So, we will have lower receivables.

Analyst questioned the elevated working capital, and management outlined a clear strategy including Q4 revenue ramp-up, inventory management, and supply chain finance to achieve the 85-day target.

Asked by Sonali Salgaonkar

Kavach order deferral Direct
So at this point in time, it happens to be Kavach because it's a safety critical item, and we have just made sure that the design that we put out doesn't need to have any upgrades, etcetera. The design we have is already approved, but we have decided to go for the next revision, which will give us better field performance, too. So that's one reason.

Analyst inquired about the INR 3 billion Kavach order deferral, and management clarified it was due to a design revision for performance improvement, not cancellation, impacting near-term revenue.

Asked by Sonali Salgaonkar

Q4 FY26 Revenue Target Direct
A couple of questions. First, the industrial revenues look to have fallen this quarter Y-o-Y if you do a back of the envelope calculation. So, what has driven that? And second, just a clarification. Of the INR1,700 crores top line expected in 4Q, INR300 crores is smart metering. Is that correct? ... Yes. So that is correct.

Analyst sought clarification on the Q4 revenue target, and management confirmed INR 1,700 crores, which was lower than an earlier figure mentioned, indicating a precise Q4 expectation.

Asked by Indrajit Agarwal

$1 billion FY28 guidance breakdown Partial
So, at the minimum, you can expect INR1,500 crores from our OSAT business. Similarly, you can expect about INR1,000 crores from PC Board business. ... Right now, we have agreements in place for OSAT 3 clients. So, we are looking at, at least INR2,500 crores coming in.

Analyst asked for a breakdown of the ambitious $1 billion FY28 revenue target, and management provided minimum contributions from OSAT and PC Board, but noted more clarity would come later.

Asked by Sameet Sinha

ODM/Product Engineering order book composition and margin impact Direct
No, you would not see much difference because the order book contains orders for those that we visibly see. Something like Kavach and those kinds of things are still yet not added to the order book because we need to get the final revision of product in the field first before we can recognize that order. ... The 20% comment was basically the minimum amount of ODM business. And that's not the limit.

Analyst questioned the impact of 20% ODM share on gross margins, and management clarified that this is a minimum and that OSAT/PCB are separate from the pure EMS ODM target, with potential for increase.

Asked by Naushad Chaudhary

Core business growth ex-metering Direct
Yes, sir. Even for the 9 months, it is probably correct. We reconcile this number and ship it to you. ... No, you're not getting any calculation wrong. It is just that we are executing other orders, too. Out of this INR9,000 crores order that is there on hand, the quantum of smart meter orders is just about 20%. The remaining pertains to EMS business. So, we are getting those businesses also fired up in the fourth quarter.

Analyst challenged the 40% core business growth figure, and management reaffirmed it, explaining that other diversified segments are contributing significantly, not just smart metering.

Asked by Aditya Bhartia

2 min read 5 chapters

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.

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