Kaynes Technology’s growth play: High-margin electronics and OSAT ambitions
Investor optimism is rising as Kaynes gears up to become an integrated electronics player with upcoming OSAT and PCB plants, backed by government subsidies.
Shares of Kaynes Technology India Ltd have climbed about 5% over the past two days following the appointment of Muthukumar Narayanaswamy as managing director on Wednesday. The move comes amid a broader top-management reshuffle after chief executive officer Rajesh Sharma resigned last week.
Investors are cheering. The stock now sits just 3% below its 52-week high of ₹7,822 after having gained about 22% over the past month, buoyed by optimism over the expected commissioning of its outsourced semiconductor assembly and testing (OSAT) facility in early October, a year after receiving all approvals. The facility, along with the printed circuit board (PCB) plant, would help Kaynes become an integrated electronics player from an electronics manufacturing services (EMS) provider.
Kaynes has secured customers for 100% of the OSAT unit’s output. The Sanand, Gujarat facility, being set up with an investment of ₹3,300 crore, is projected to generate ₹650 crore in revenue by FY27 and scale to ₹3,000 crore by FY30.
The HDI multilayer PCB facility at Oragadam, Tamil Nadu, is slated for commissioning in Q4FY26 and is expected to significantly reduce India’s reliance on imported advanced PCBs. Together, the OSAT and PCB plants have received capital subsidies of 70% and 30%, respectively, from central and state governments.
“A strategic pivot is underway, with Kaynes entering high-margin, long-cycle businesses in the electronics value chain, aided by the government of India’s capital subsidy", noted IIFL Capital Services in a 22 September report. IIFL expects 44% CAGR in Kaynes’ earnings per share (EPS) over FY25-28 and RoE (return on equity) to increase from FY28 as new revenue streams scale up.
The company’s May acquisition of Canada-based EMS firm August Electronics Inc. is also expected to expand its North American footprint.
Kaynes’ growth story
Kaynes’ core businesses, including PCB assembly, cable assembly, and smart metering across industrial, automotive, and aerospace segments, remain robust. Total orderbook grew 47% year-on-year in the June quarter (Q1FY26) to ₹7,400 crore. Given the strong visibility, the management has retained its revenue guidance of ₹4,500 crore for FY26, up 65% year-on-year, and higher than FY25’s 50% growth. This is despite the lower-than-expected revenue growth of 34% in Q1FY26.
Further, earnings before interest, taxes, depreciation and amortization (Ebitda) margin guidance has been revised to 17% from 15.6%, driven by increased contribution from high-margin businesses and improved operating leverage. Q1FY26 Ebitda stood at ₹113 crore and the margin rose 350 basis points to 16.8%. The scale of activity is reflected in the steep 80% jump in Kaynes’ FY25 employee count. Bloomberg consensus estimates Kaynes’ FY26 EPS to grow by an impressive 53%, albeit lower than FY25’s 60% growth.
Earlier this month, Kaynes raised funds through issue of compulsorily convertible preference shares for its semiconductor subsidiary to an Indian IT services firm. It had also raised ₹1,600 crore through a QIP in June, which should help meet its capex and working capital needs. Its net debt-to-equity ratio at Q1FY26-end was comfortable at 0.2x, despite a 72% year-on-year increase in net debt.
After the recent rally, valuations have become pricey: the stock trades at over 100x FY26 estimated earnings. Going forward, successful commissioning and ramp-up of upcoming facilities will be key to keeping investor interest alive in the stock. That said, any delays in reaching full capacity or quality issues could pose risks to Kaynes’ ambitious expansion plans.
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