Accumulate Kaynes Technology India Ltd For Target Rs.4,390 by Prabhudas Liladhar Capital Ltd
Core EMS Delivers; New Businesses Poised to Accelerate
KAYNES maintained its growth outlook, expecting revenue growth at nearly 2x the EMS industry growth of ~15–17%, supported by deeper customer penetration, new product additions and diversification, while refraining from providing absolute revenue guidance. OSAT and PCB commercial revenues are expected from Q3FY27, with FY27 revenue targeted at INR 4.5–5.0bn. Smart-metering revenue declined 12% YoY as supplies were deliberately moderated amid elevated receivables, while management is evaluating divestment of the service/installation business and expects greater clarity by Feb’27. KAYNES added several new customers, including a leading electric twowheeler manufacturer, global European brands and a wireless communication company, and entered a strategic partnership with Mitsui for semiconductor packaging. OCF remained negative at ~INR 2.6bn, although management expects cash flows to turn positive by FY27-end. KAYNES appointed Walker Chandiok & Co LLP as statutory auditor for five years. We had tweaked our earnings estimates for FY27E/FY28E and Maintain ‘Accumulate’ rating. Our DCF-based TP is INR 4,390, implying PE of 50x Mar’28E earnings We estimate FY26-28E revenue/EBITDA/PAT CAGR of 41.6%/40.1%/23.9%.
Q1FY27 financial Performance:
Revenues grew by 40.5% YoY at INR 9.5bn (PLe: INR 8.4bn). Gross margins contracted by ~690bps to 34.4% (PLe: 35.3%). EBITDA grew by 30.5% YoY to INR 1.5bn (PLe: INR 1.2bn. EBITDA margins contracted by ~120bps to 15.6% (PLe: 14.8%). PBT declined by 8.5% YoY to INR 879n impacted by higher depreciation and finance costs, with depreciation and interest expenses rising by ~137% YoY and 30.6% YoY, respectively. (PLe: INR 705mn). PAT declined by 24.4% YoY to INR 564mn (PLe: INR 543mn)
Segmental performance:
Automotive/Industrial/Railway/Medical/IT&IOT/Aerospace segment revenue grew by ~35%/31%.81%/181%/69%/181% YoY in Q1FY27. Company orderbook grew by 20.3% YoY to INR 89bn.
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SEBI Registration No. INH000000271
