Kaynes Technologies Ltd. shares will be in focus heading into trade on Friday after the Electronics Manufacturing Services (EMS) company reported its third-quarter results after market hours on Thursday. It was a troubling quarter for Kaynes, as it missed estimates on all fronts.
In its latest note, Jefferies has noted the earnings miss from Kaynes Tech in the December quarter, highlighting a noticeable slowdown in the industrial sales division, while operating margins missed estimates.
This comes on the back of a December quarter that saw profit rise 15% to Rs 76.6 crore, while revenue saw an uptick of 21% to Rs 804 crore. Margins expanded to 14.8% as well, but were far below brokerage estimates.
Jefferies noted that sales growth had a sharp deceleration compared to H1FY26, while net working capital remains under pressure, rising 23 days on a quarter-on-quarter basis. Net debt rose to Rs 660 crore as well, as the balance sheet and working capital remain key headwinds for the counter.
Kaynes Tech Q3FY26 (Cons, YoY)
- Net profit up 15.4% at Rs 76.6 crore versus Rs 66.4 crore YoY
- Revenue up 21.6% at Rs 804 crore versus Rs 661 crore YoY
- EBITDA up 26.9% at Rs 119 crore versus Rs 94 crore YoY
- Margin at 14.8% versus 14.2% YoY
Despite the poor quarter, though, the firm noted that its target price implies a 41x price to earnings, which is far below the stock's historical averages. Shares of Kaynes Tech are currently trading at a price to earnings ratio of 37x and have seen drawdowns of more than 40% in the last six months.
Meanwhile, Macquarie has also put out a note on Kaynes Tech, citing a weak performance in the December quarter. The firm noted that the revenue miss was primarily due to lower-than-anticipated growth for the Industrials and Railways segment.
Management of Kaynes Tech had expressed high conviction about H2 momentum, which now seems misplaced, says Macquarie, which expects the stock to open lower on Friday. Management commentary on the conference call will be a key monitorable.
Kaynes Tech: Target Price And Upside
Despite the headwinds, Jefferies maintained a 'buy' rating on Kaynes Tech with an unchanged target price of Rs 5,940, which implies a sizable upside of 65%.
Macquarie, on the other hand, retained the 'outperform' rating with a target price of Rs 5,900, which implies an upside of around 64% compared to Thursday's closing price.
READ MORE: Better Than Dixon Tech, Kaynes Tech? Morgan Stanley Upgrades Outlook On This EMS Stock
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