Kaynes Technology Shares Shed $1 Billion In Market Cap On Analyst Concern

Kaynes Technology India Ltd.’s shares extended losses, erasing more than $1 billion in market value this month, as concerns grow over its accounting practices. 

The electronics component maker’s shares fell 13% on Monday, stretching losses so far in December to over 30%, following reports from JPMorgan Chase & Co. and Kotak Institutional Equities on concerns around deterioration in its cash flows. The company’s market capitalization has dropped to $2.8 billion.

Kaynes' accounting treatment of two of its acquisitions was “ambiguous” and there was a “variance in cash flow statement versus asset additions,” Kotak, analysts including Sandeep Gupta, wrote in a Dec. 3 note. A day later, JPMorgan analysts said there were “question marks” on the company’s revenue growth.

Kaynes issued a clarification on Friday, explaining its compliance with key points raised by Kotak. In an analyst call on Monday, the company said there are no inconsistencies and ambiguities in its annual report, NDTV reported. The company has not yet published transcript of the call and didn’t respond to emailed questions.

“Investor feedback indicates Kaynes needs to show improvement in cash flows,” JPMorgan analyst Bhavik Mehta wrote. “All eyes will be on third quarter earnings where we will ask questions on receivables, working capital, provisions for doubtful debts.”

The stock has a buy recommendation from 14 out of 26 analysts tracking it, according to the latest data compiled by Bloomberg.