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FY30 blueprint in place; multiple levers to sustain strong growth

We attended the analyst meet hosted by Kaynes Technology (KTIL), where the management laid out its blueprint of growth and margin over the next 5Y. KTAs: 1) The mgmt reiterated its 60% FY26 revenue growth guidance (strong Rs80bn orderbook; FY25 revenue: Rs27.2bn) and pointed to potential of achieving USD1bn revenue (on TTM basis) earlier than the target of FY28, with FY30 revenue at Rs2bn (FY25-30 CAGR: 45%). 2) EBITDAM is set to see expansion based on 5 key levers: i) richer product mix, ii) scarcity of manufacturers in low-volume high-tech, iii) push into advanced PCBs (HDI/multi-layer/flex), high-tech products, iv) backward integration into components, v) rising ODM share. 3) With the pilot OSAT plant now operational and the main plant to come onstream by end Dec-25, KTIL aims for Rs1/10bn in FY26/27 (bulk of phase 1 capacity already tied up) and Rs5bn HDI PCB revenue in FY27. 4) KTIL aims to place a dummy satellite in orbit by May-26 and launch the operational satellite by Dec-26, with 3 core capabilities: a) satellite design, b) in-house ADS (Attitude Determination System), c) scalable Command and Control Centre for large drone fleets. 5) Export share set to rise to 20%; NA operations could add 15% of consolidated revenue by FY30, taking export/export-denominated revenue to >30% of consolidated revenue. 6) OCF to turn positive by FY26 end on monetization of Rs3bn receivables, with working capital set to improve to 70-80 days vs 116 days as of H1FY26. KTIL trades at 41x FY28 Consensus EPS.

KTAs from the Analyst Meet

1) The mgmt reiterated its FY26 revenue growth guidance of 60% (on strong Rs80bn orderbook); it highlighted a strong likelihood of achieving USD1bn revenue (on TTM basis) earlier than its target of FY28, with FY30 revenue pegged at Rs2bn (FY25-30 CAGR: 45%). 2) KTIL targets consol revenue of ~Rs 45bn; Rs 41-42bn is expected from EMS (incl August Electronics and OSAT); OSAT revenue to ramp up from Rs1bn in FY26 to Rs10bn in FY27 and PCB to contribute >Rs5bn in FY27. 3) In Smart Meters, KTIL targets Rs8-10bn in FY26 (with Rs10bnpa run rate ahead), on a Rs20bn backlog (1.5-2Y of orders and confirmations), with profitability above the normal EBITDAM. 4) Central subsidy of Rs15bn (expected shortly for OSAT), with the balance post commencement of operations (lag of 1-2 quarters); the Chennai plant PLI—earlier under SPECS 2.0 (now lapsed)—is in the final stages of migration under ECMS. 5) KTIL aims to place a dummy satellite in orbit by May-26 and launch the operational satellite by Dec-26, with 3 core capabilities: i) satellite design, ii) in-house ADS, iii) scalable Command & Control Centre for large drone fleets. 6) 50% of the business is government-funded/linked and, with government execution weak over the last 3Y (railways, which was 33% of revenue, did not grow; aerospace underperformed; and medical tapered off), the mgmt’s higher confidence stems from strong order wins in aerospace and a pickup in non–smart meter industrials, railways led by the legacy signaling business and Kavach ODM; Rs3-4bn in FY26. 7) Capex outlay of Rs85.2bn over FY26-29 would be funded by Rs18bn equity, Rs19.5bn debt, Rs35.4bn subsidies, and Rs12.3bn internal accruals.

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