Kaynes Technology misses Street estimates, FY26 guidance

Kaynes Technology India plunged more than 19% on Thursday as India’s third-largest electronics manufacturer drew investor ire over missing revenue and cash flow targets and failing to provide guidance for 2026-27.

It ended 2025-26 with revenue of ₹3,626.4 crore and net profit of ₹363.9 crore, missing Bloomberg estimates of ₹3,871 crore and ₹435 crore, respectively.

The company’s operating revenue was also 19% below its initial guidance for the fiscal year. Management had projected revenue of ₹4,500 crore at the start of the year, before lowering the target to ₹4,000 crore in the December quarter, meaning full-year revenue still fell 9.3% short of the revised guidance.

Additionally, it ended with a negative operating cash flow of ₹600 crore, contrary to management's projection that the business would start generating cash.

Investor concerns

At the post-earnings analyst call, investors and analysts alike questioned Kaynes’s management, represented by managing director Muthukumar Narayanaswamy, on how the management failed to recognize weakness in the market halfway into the March quarter.

“About 75 days into the March quarter, management came on television and held on to their guidance. They guided for only marginal negatives on the operating cash-flow side. Both these guidances, 75 days into the 90-day quarter, were way off—and this is concerning,” said Viral Shah, research analyst at brokerage firm Enam Holdings.

Narayanaswamy, who was appointed as managing director for a five-year term in 2025-26 itself, blamed the inconsistency on two projects.

“We projected our confidence based on a large order for the electrification of a vehicle from a manufacturer and an order from the Indian government. The order by the electric vehicle maker, one of the largest, had dropped by about 90% in revenue, and we are their single supplier. But we were confident we would get the government order. While the product is ready and approved, the project is delayed,” he said.

Nitin Arora, equity fund manager at Axis Mutual Fund, questioned the company’s failure to offer guidance for 2026-27. “It is confusing for the industry, because on one hand, you’ve said it is a customer-driven business, and the demand you’re seeing is very good. What is stopping you from offering growth guidance for the clarity of investors? Are you seeing further deterioration in working capital, which in turn will erode revenue growth this fiscal?”

Narayanaswamy, on this note, said, “We are not giving a revenue growth number, but we are open to giving an overall revenue guidance.”

“We have seen the current revenue of the industry grow at 16-18%, and we’ve grown at double the pace of the industry. This year too, our commitment is to grow at double the industry’s growth pace. We are penetrating new verticals, and we’re not giving a specific number because some of the industries would grow at an unspecified growth rate,” he said.

Weak outlook

At the heart of Kaynes Technology India’s underperformance relative to peers such as Syrma SGS Technology and Dixon Technologies (India) is its failure to meet Street expectations. Both Syrma and Dixon met or exceeded analyst expectations. While Syrma’s automotive and healthcare electronics verticals recorded revenue growth of over 35%, Dixon registered a 26% year-on-year growth in its top line despite a slowdown in the mobile phone market.

Dixon’s shares rose 11% through Wednesday, a day after its earnings. Syrma’s shares, however, received a negative response, down 8% since Monday, after its proposed takeover of green energy firm K-Solare Energy fell through.

Analysts, as a result, have projected Keynes’s near-term growth to be uncertain.

“Even though the company’s order book of ₹8,000 crore remains, the question put forth by investors is that management should have been straightforward with investors, rather than projecting tall growth and failing to deliver it. At least in the first half of this fiscal, Kaynes is likely to struggle considerably,” said Harshit Kapadia, vice-president at Elara Capital.

He added that with market uncertainties in place, “it may be difficult for Kaynes to immediately turn around the weak points of its balance sheet, such as the negative cash flow that it failed to turn around last fiscal”.