Accumulate Kaynes Technology India Ltd For Target Rs. 3,506 by Prabhudas Liladhar Capital Ltd
Metering Challenges Offset EMS Growth
The company missed its revenue and profitability guidance in FY26 mainly due to delays in execution of two government-related smart meter projects in Q4FY26, geopolitical disruptions, supply-chain challenges and weakness in a key EV customer. The automotive/Industrial segment grew by ~19%31% in Q4FY26. By the end of FY26 company is having an order book of Rs 84bn, reduced from Rs 91bn by the end of 9MFY26. Additionally, average monthly order inflow witnessed a significant decline, while working capital days increased by ~23 days YoY in FY26, mainly due to a 57-day rise in receivable days. Company refrained from providing absolute FY27 revenue guidance; however, it expects KAYNES to grow at nearly 2x the EMS industry growth rate of ~15–16%. Management indicated that working capital stress has likely peaked and expects ~70–80% normalization over the next three quarters and OCF to be positive in FY27. We have downward revised our FY27E/FY28E earnings by 29.3%/27.9% with correction in guidance and downgrade to ‘Accumulate’ rating. Our DCF-based TP is Rs 3,506, implying PE of 40x Mar’28E earnings We estimate FY26-28E revenue/EBITDA/PAT CAGR of 39.0%/37.6%/26.3%.
Q4FY26 financial Performance:
Revenues grew by 26.2% YoY at INR 12.4bn (PLe: INR 15.7bn). Automotive/Industrial/Railways/ IT&IOT/Aerospace segment revenue grew by ~19%/31%/8%/22%/20% whereas Railways segment revenue declined by ~11% YoY in Q4FY26. EBITDA grew by 15.4% YoY to INR 1.9bn (PLe: INR 2.5bn). EBITDA margins contracted by ~150bps to 15.6% (PLe: 15.8%). PBT declined by 1.2% YoY to INR1.4bn, impacted by higher depreciation and finance costs, with depreciation and interest expenses rising by 221.3% YoY and 38.7% YoY, respectively. (PLe: INR 2.0bn). PAT declined by 21.5% YoY to INR 912mn (PLe: INR 1.5bn). Company orderbook grew by ~27% YoY to INR 84bn in Q4FY26.
FY26 financial Performance:
Revenues grew by 33.2% YoY at INR 36bn. Automotive/Industrial/Railways/Medical/IT&IOT/Aerospace segment revenue grew by 28%/33%/14%/16%/60%/90% YOY. EBITDA grew by ~40% YoY to INR 5.7bn. EBITDA margins expanded by ~70bps to 15.8%. PBT grew by 36.3% YoY to INR 5.0bn. PAT grew by 23.9% YoY to INR 3.6bn.
Please refer disclaimer at https://www.plindia.com/disclaimer/
SEBI Registration No. INH000000271Accumulate Paradeep Phosphates Ltd For Target Rs.141 by Prabhudas Liladhar Capital Ltd
