Kaynes Tech management makes big comment on re-rating as stock falls over 17%

Kaynes Technology shares plunged more than 17% on Thursday after the company’s Q4FY26 earnings and management commentary disappointed investors, even as the management highlighted its long-term semiconductor ambitions that could potentially re-rate the stock in the coming years.

The stock fell as much as 17% intraday to around ₹3,366 on the NSE, before recovering slightly to trade near ₹3,505. The sharp correction came after weaker-than-expected quarterly performance and cautious brokerage commentary around execution, working capital and guidance misses.

During the post-results conference call, the company said its focus on the semiconductor OSAT (Outsourced Semiconductor Assembly and Test) facility represents a major strategic shift toward a higher-margin business model. Management indicated that investors are closely tracking the company’s ₹2,800 crore investment plan in the semiconductor segment, with successful execution by 2027 potentially transforming Kaynes from a pure-play EMS company into a semiconductor-focused technology player.

The company’s comments come at a time when India is aggressively pushing domestic semiconductor manufacturing through government incentives and policy support.

However, near-term concerns continued to weigh on sentiment.

Kaynes reported Q4FY26 consolidated revenue of ₹1,242.6 crore, up 26.2% year-on-year, while EBITDA rose 15.4% to ₹193.6 crore. Net profit, however, declined 21.5% YoY to ₹91.2 crore. EBITDA margin narrowed by 140 basis points to 15.6% from 17% a year ago.

Brokerages flagged multiple operational concerns after the results.

JPMorgan downgraded the stock to “Neutral” and cut its target price to ₹4,000. The brokerage said Kaynes missed its own Q4FY27 revenue guidance by 27% and also fell short of both Street and JPMorgan expectations. It further noted that net working capital days remained elevated at 125 days against management guidance of 85 days.

The brokerage also cut earnings estimates by 12–17% over the next two years across the core EMS, OSAT and PCB businesses. JPMorgan reduced the valuation multiple for the core EMS business to 33x from 45x, citing slower expected revenue growth and sustained working capital pressure.

While JPMorgan still expects a strong 40% revenue CAGR and 45% earnings CAGR over FY26–FY28 due to OSAT and PCB ramp-up, it said the stock may remain a “show me” story until execution improves and the gap between guidance and actual numbers narrows.

CLSA retained its “Outperform” rating with a target price of ₹4,200, but also warned of a likely negative market reaction to the quarterly results. The brokerage said Q4 revenue of ₹1,240 crore missed both company guidance and Street expectations, while margins also remained below estimates.

According to CLSA, balance sheet deterioration was another key concern heading into the earnings announcement, with working capital increasing sharply and net debt remaining elevated.

Despite the sharp correction, analysts believe the semiconductor business remains the key long-term trigger for Kaynes Technology, with execution over the next 18–24 months expected to determine future valuation re-rating potential.

Disclaimer: This article is for informational purposes only and should not be construed as investment advice. Views mentioned are those of the respective brokerages.