Summary
Kaynes Technology India Limited - Q3 FY 2026 Earnings Call Summary Friday, February 06, 2026 14:00
Event Participants
Executives 5 Dr. Muthukumar Narayanaswamy, Mr. Jairam Sampath, Mr. Ramesh Kunhikannan, Mrs. Savitha Ramesh, Mr. Sumit Verma
Analysts 10 Achal Lohade, Aditya Bhartia, Deepak Agarwal, Indrajit Agarwal, Manish Ostwal, Meet Jain, Naushad Chaudhary, Neel Mehta, Praveen Sahay, Renu Baid, Sameet Sinha, Siddhartha Bera, Sonali Salgaonkar, Viral Shah
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Total Revenue (9M FY26) | ₹2,383.7 crores | +37% YoY; reflects a phase of consolidation and realignment of execution with long-term strategy. |
| Operational EBITDA (9M FY26) | ₹377.8 crores | +55% YoY; growth driven by improved product mix and operational efficiencies. |
| EBITDA Margin (9M FY26) | 15.9% | +190 bps YoY; margin expansion attributed to higher contribution from high-margin segments. |
| Profit After Tax (9M FY26) | ₹272.6 crores | 11.4% PAT margin; indicates steady bottom-line growth despite execution delays. |
| Order Book | ₹9,000 crores | +50% growth in monthly order inflows; represents approximately 1.5 years of revenue visibility on a rolling basis. |
| Smart Meter Revenue | ~₹300 crores (Q3) | Management is transitioning from an AMISP model to a pure device/ODM supplier model to reduce capital intensity. |
| Net Working Capital (Current) | 139 days | Elevated due to deliberate inventory buildup for uncertain lead times and higher receivables. |
Geographic & Segment Commentary
- EMS (Electronic Manufacturing Services): Core business is diversifying away from smart meter concentration toward aerospace, defense, and railways. Management noted a 20% shortfall against internal plans due to project alignment delays at the customer end and pending regulatory approvals for new product revisions.
- Industrial & Automotive: Growth is being fueled by new client acquisitions in Electric Vehicles (EV) and non-metering industrial applications. The segment is moving back toward a diversified portfolio with 4-5 verticals firing simultaneously.
- North America (August Electronics): Integration is unlocking specialized talent in high-margin RF microwave assemblies. This segment is broadening the North American footprint and synergizing with the OSAT roadmap.
Company-Specific & Strategic Commentary
- Semiconductor OSAT (Sanand): The facility is now operational and ramping up. Crucially, FSA approval under the ISM framework has been secured, ensuring 50% central and 20% state government capital subsidies.
- PCB Manufacturing (Chennai): Strategic focus on high-end complex HDI multilayer PCBs for defense and aerospace. Management estimates this ₹1,500 crore investment could unlock ₹13,500 crores in downstream EMS revenue for the group.
- Railways (Kavach): Revenue was impacted by a conscious decision to delay rollout in favor of a new design revision. Management expects this to lead to a higher market share (beyond 15%) in the safety-critical segment in the long term.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| FY26 Revenue | ₹4,100 crores | Revised downward from ₹4,400 crores due to deferral of the Kavach (Railway) orders. |
| Net Working Capital | 70 - 85 days by March 2026 | Expected to improve via higher Q4 revenue denominator and supply chain financing for receivables. |
| FY28 Revenue Goal | $1 billion (USD) | Target remains firm; expected mix of ₹2,500 crores from OSAT/PCB and the remainder from core EMS. |
| Operating Cash Flow | Positive for FY26 | Management targets 9M negative OCF (-₹55 crores) to turn positive by year-end through improved collections. |
Risks & Constraints
| Risk | Context |
|---|---|
| Execution Delays | Revenue growth has lagged order book growth due to customer project misalignments and regulatory approval cycles. |
| Working Capital Intensity | High inventory (₹1,226 crores) and receivables (₹1,249 crores) continue to stress liquidity; mitigation involves supply chain discounting. |
| Project Concentration | While diversifying, large-scale projects like Kavach and generic smart meter rollouts remain subject to policy and design-driven delays. |
Q&A Highlights
Revenue Deferral & Guidance
- Question: Why has the revenue growth gap widened despite the strong order book? (Siddhartha Bera)
- Answer: Orders are non-cancellable but tied to customer project timelines. A shortfall of ~20% occurred because customers hold inventory until their entire project aligns. Additionally, the Kavach railway project was deferred for design revisions (Ramesh Kunhikannan).
Working Capital Management
- Question: How will NWC drop from 139 days to 85 days in one quarter? (Sonali Salgaonkar)
- Answer: Historically, 35-40% of sales occur in Q4, which naturally improves the day-count denominator. We are also aggressively using supply chain finance to discount receivables at customer limits (Jairam Sampath).
New Business Contribution
- Question: Can you break down the $1 billion FY28 target? (Sameet Sinha)
- Answer: We target minimums of ₹1,500 crores from OSAT and ₹1,000 crores from PCB manufacturing. The core EMS business will make up the balance, driven by indigenization in defense and aerospace (Jairam Sampath).
Asset Quality & Smart Meters
- Question: Are you moving away from smart meters due to working capital issues? (Santhosh Seshadri)
- Answer: We are exiting the AMISP (service) model but remain committed as an ODM device maker. This shifts us back to a traditional EMS/ODM profile with lower receivable risk (Ramesh Kunhikannan).
Key Takeaway
Kaynes Technology reported a steady 9M FY26 with 37% revenue growth and significant EBITDA margin expansion to 15.9%, though FY26 revenue guidance was moderated to ₹4,100 crores due to railway project deferrals. The company is undergoing a structural shift, transitioning from a pure-play EMS provider to an integrated electronics powerhouse with operational OSAT and upcoming HDI PCB facilities. Strategic backward integration is expected to yield substantial downstream PCBA business, while the move to a “device-only” model in smart metering aims to resolve persistent working capital challenges. Despite near-term NWC pressure at 139 days, management maintains a confident $1 billion revenue target for FY28, underpinned by a robust ₹9,000 crore order book and secured government subsidies for its semiconductor initiatives. The focus now shifts to Q4 execution and turning operating cash flows positive.
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