- Kaynes Technology denies awareness of institutional investors exiting despite 25% stock drop
- Shares fell 10% after Kotak report questioned accounting and disclosures in FY25 annual report
- Management issued clarifications rejecting allegations and confirmed compliance with accounting norms
Kaynes Technology India Ltd. said on Wednesday that it is not aware of any large institutional investor exiting the stock, even as shares have dropped more than 25% since early December after a brokerage report raised questions on the company's financial disclosures.
The company's shares continued to slide on Wednesday, falling 10% to Rs 3,947, extending losses that began after a Dec. 4 note from Kotak Institutional Equities flagged issues related to accounting treatment, cash flows and disclosures.
The sell-off followed scrutiny of Kaynes' FY25 annual report, particularly around its smart metering acquisition, capital spending and related-party disclosures. The company has since issued multiple clarifications to exchanges and analysts, rejecting the allegations and maintaining that its reporting complies with accounting standards.
Executive Vice Chairman Ramesh Kunhikannan said the management has already addressed the concerns raised and remains focused on executing its business plans.
“We are concentrating on our job. Whatever concerns have been raised, we have already addressed,” Kunhikannan told NDTV profit in a televised interaction.
Institutional Holding
Kunhikannan said the management has not held fresh discussions with large investors following the recent developments and does not have information indicating any institutional exit from the stock.
“There was no conversation at all,” he said when asked about engagement with large investors.
Responding to a specific question on whether any major institutional shareholders had sold their holdings, Kunhikannan said, "No, I am not aware."
Market Fallout
Kotak Institutional Equities' report highlighted the impact of Kaynes' Iskraemeco smart metering business, which it said contributed 44% of the company's FY25 profit growth. The report raised questions over the subsidiary's reported net margin in the second half of the year and the implied payback period.
The brokerage also pointed to what it described as ambiguous accounting around the acquisition of Iskraemeco and Sensonic, concerns over negative cash flow, an extended cash conversion cycle, and higher capital expenditure. It maintained a reduce rating on the stock.
Kaynes responded on Dec. 5 with a clarification to stock exchanges, stating that certain inter-company transactions were eliminated during consolidation as required and were omitted from standalone disclosures due to oversight. The company said it had corrected those disclosures.
Reporting Clarifications
The management later reiterated that it did not see any ambiguity in the FY25 annual report. During an analyst call on Dec. 8, the company said the conclusions drawn in the brokerage note were not valid and that it had issued a detailed response.
"There are no inconsistencies and ambiguities," the management said during the call. "Most of the conclusions or implications made are actually not valid."
Outlook And Commitments
Kunhikannan said the company remains confident of delivering on commitments already communicated to the market, despite the recent fall in its share price.
"I'm very confident whatever earlier what we have promised the market, we will deliver it," he said.
He added that the company does not operate on quarter-to-quarter targets and continues to focus on annual performance.
Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.
