Kaynes Technology is in focus yet again, a day after the stock fell 20%. This time around, Jefferies has out with a note on the EMS player, notably cutting target price in the wake of poor fourth quarter earnings. However, the brokerage remains bullish on the company's long-term growth prospects, mentioning its OSAT and PCB segments as silver lining.
After Nuvama and JPMorgan, Jefferies has now joined the bandwagon of Kaynes Technology, issuing a downgrade after the company reported its fourth quarter earnings on Wednesday, missing all estimates as well as failing to meet the full-year revenue guidance. However, the brokerage has maintained a 'buy' call on the counter.
Jefferies has titled its latest note on Kaynes Tech as 'From Strength to Strain', signifying the arc of a stock that was among the most celebrated names in India's EMS space and is now navigating a credibility crisis, having missed guidance on revenue while failing to meet street estimates in other metrics.
The brokerage noted that following a 55% decline from its October 2025 peak, Kaynes now trades at 43x FY27 price-to-earnings. This is significantly below its historicaly average multiple of 65x.
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This is the central thesis of Jefferies' 'buy' call, even though the brokerage has still cut the target price from Rs 4,515 to Rs 3,970. They have also cut Kaynes' FY27 and FY28 EPS estimates by mid-teens to reflect the weak Q4 and a working capital situation, which is expected to remain elevated at above 100 days.
Notably, Jefferies flagged the absence of any company guidance for FY27-28, although the company maintains it will beat the industry in terms of growth in FY27. The lack of guidance, nevertheless, doesn't help Kaynes Tech's case, as the company has already missed revenue estimates by 11% and PAT by 17% while operating cash flow came in at a negative Rs 600 crore.
But from a long-term perspective, Jefferies believes Kaynes Tech's growth story remains intact. The brokerage firm estimates a 43% EPS CAGR over FY26-29 on a low base, with growth to be driven by OSAT and PCB revenue beginning from FY27. The management itself has identified these two segments as key pillars of the next phase of growth.
ALSO READ: Kaynes Tech Management Names One Segment Causing All The Cash Flow Concerns
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