Quick Links
Value Research Fund Advisor More Features
Fund Screeners Go to Fund Screener
Narrow your fund search super efficiently based on multiple filters – fund categories, fund ratings, top AMCs, active vs passive, direct vs regular, and many more!
Quick Links
Stock Screeners
Recently Viewed
Notifications
A few things have gone wrong, and until they are addressed, caution is warranted even at current levels
22-May-2026•Satyajit Sen 
SHARE
Vinayak Pathak/AI-Generated Image
Summary: Kaynes Technology is down 61 per cent from its peak. The business hasn't broken: revenue has grown at 46 per cent CAGR over six years. Something else has changed, and it's more important than the stock price.
Kaynes Technology's stock is down 61 per cent from its peak. The trailing earnings multiple has compressed from nearly 170 times to around 55 times. The market is not just repricing a growth stock, but it is asking whether the original valuation was ever fully justified.
The business itself is not broken. Revenue has grown at a 46 per cent CAGR since FY20, from Rs 368 crore to Rs 3,626 crore in FY26. Profit after tax grew from Rs 9 crore to Rs 364 crore. The end-markets—industrial electronics, automotive, electric vehicles, railways, aerospace, medical electronics, smart meters and semiconductors—remain attractive. India's electronics manufacturing tailwind is real.
But a few specific things have gone wrong. And until all of them are resolved, this electronics manufacturing company remains a promising business carrying a higher burden of proof than most investors signed up for.
In December 2025, questions surfaced about related-party disclosures involving Kaynes and its associates. The stock lost nearly Rs 10,000 crore in market value over three sessions. That alone was a significant blow to investor confidence. When the guidance miss followed, it landed on an already damaged foundation.
At the start of FY26, management guided for revenue of Rs 4,500 crore. This was later cut to Rs 4,000 crore. Actual revenue came in at Rs 3,626 crore, nearly 20 per cent below the original guidance.
Management blamed delays in two government orders and a sharp fall in revenue from one large electric vehicle manufacturer, where Kaynes was the sole supplier and where revenue from that customer dropped approximately 90 per cent.
Disruptions like this can happen in electronics manufacturing. The larger problem is that management overestimated revenue conversion and remained confident too late. An investor on the earnings call asked why guidance was held 75 days into the quarter when the final result was so far below expectations. Management said samples had been approved, materials ordered and pre-manufacturing started, but the order was delayed rather than denied. The explanation is plausible. Plausible explanations do not rebuild investor confidence on their own.
FY26 revenue grew 33 per cent and profit after tax grew 24 per cent. But the balance sheet became heavier.
Net working capital days—the number of days a company's cash is tied up in operations before it collects payment—rose from 87 to 125. Operating cash flow turned negative Rs 600 crore. Kaynes is not overleveraged, with borrowings broadly flat at around Rs 913 crore. But it is locking up more money in receivables, inventory and project-related assets as it enters more complex businesses.
Over the past eight years, operating cash flow has been negative in four of them. Cumulative operating cash flow stands at negative Rs 568 crore against cumulative profit after tax of Rs 1,006 crore. Profits have not converted into cash at the same pace they have been reported.
Two businesses explain most of this cash drain: smart meters and the newer semiconductor and PCB ventures. Both are consuming capital at a pace that profits alone are not covering.
The main source of balance sheet stress is smart meters. Kaynes entered this business through Iskraemeco. But supplying meters as a product is one business, and taking responsibility for installation, operations, maintenance and software is another.
The latter moves the company toward the AMISP model, Advanced Metering Infrastructure Service Provider, where payment depends on field installation, utility processes and service performance rather than factory dispatch.
The numbers show this clearly. The metering business generated around Rs 971 crore of FY26 revenue, roughly 27 per cent of consolidated revenue, but carried around Rs 1,365 crore of receivables and related exposure. The core electronics manufacturing business looked different: Rs 2,655 crore of revenue with only Rs 399 crore of receivables.
Management plans to move away from AMISP-type work and supply meters as a product to project implementers rather than carrying the full installation burden. That should improve cash conversion over time, though management itself said almost 50 per cent of FY27 metering revenue could still come from the old model.
The broader opportunity remains large. Under the RDSS, the government's Revamped Distribution Sector Scheme to modernise electricity distribution, 20.33 crore smart meters have been sanctioned but only 4.69 crore installed as of March 2026, just 23 per cent of the target. Low penetration signals a long runway. But the industry is still working through a difficult rollout phase where installation delays, utility acceptance and payment milestones regularly hold back cash collection.
While smart meters are the larger source of cash stress today, OSAT and PCB are building their own funding requirement alongside it.
OSAT, outsourced semiconductor assembly and testing, is where chips are assembled and tested after fabrication. PCB, printed circuit boards, form the foundational component inside almost every electronic device. Both are attractive long-term businesses. But they require heavy capital expenditure, customer qualification and utilisation ramp before they generate meaningful returns.
The Sanand semiconductor unit was approved with an investment of around Rs 3,300 crore and a capacity of 60 lakh chips per day. Commercial operations have commenced. The high-density interconnect PCB unit is nearing readiness. If utilisation ramps slowly, depreciation and finance costs will arrive before earnings do.
Kaynes Technology at 55 times earnings still prices in significant execution. The business has real long-term potential, strong revenue growth, attractive end-markets and a credible semiconductor bet. But three problems need resolution first: management must rebuild credibility on revenue guidance, operating cash flow must turn positive and smart meters must stop absorbing disproportionate capital.
The investment case has shifted from believing the vision to proving the cash flow. Receivables must fall. Operating cash flow must turn positive. The newer businesses must ramp without funding surprises.
Until then, the stock demands caution even at current prices. This is a business worth watching closely, not one that yet rewards buying confidently.
Knowing when "worth watching" becomes "worth buying" is the harder call. And it requires tracking the business through its ups and downs, not just at the moment it makes headlines. That's what Value Research Stock Advisor does: fewer stocks, studied properly, with a clear view on when to buy, hold and sell.
Join Stock Advisor
Ask Value Research 
•By Aakar Rastogi
A familiar drift
3 min read•By Dhirendra Kumar 
The hottest global funds are the riskiest bets
4 min read•By Aakar Rastogi
Why PPFAS’s CIO isn’t worried about FII selling
6 min read•By Lekisha Katyal
Welcome to the New Value Research!
2 min read•By Value Research
Stocks Podcast
New episodes every Friday
The AI revolution worth having
Forget the trillions being bet on AI. The revolution that matters is the one you can build for yourself, for free, right now.
Other Episodes
Old file, new company The market misprices stocks using outdated assumptions. The opportunity lies in that gap.
When ‘this too shall pass’ doesn’t For 30 years, I have told readers to ride out every crisis. The US-Iran war is the exception, and the reason matters more than the news itself.
Read the signal, not the list The Prime Minister’s seven appeals are about consumption. The signal they carry is about the rupee.
The Omaha show is over Sometimes waiting for too long can lead to missed opportunities
Genus Power’s profits more than doubled. Where is the cash?
5 min read•By Satyajit Sen
Before booking a cabin on Cordelia’s IPO, read this
10 min read•By Lekisha Katyal
Telecom or tech? That one call decides what Jio is worth
6 min read•By Abhijeet Pandey
Before you subscribe to Turtlemint’s IPO, read this
9 min read•By Lekisha Katyal
The biggest IPO ever, at a difficult moment
6 min read•By Abhijeet Pandey
SpaceX is worth half India’s GDP. It needs a little gravity
8 min read•By Harshita Singh
Why PPFAS’s CIO isn’t worried about FII selling
6 min read•By Lekisha Katyal
The balance sheet grew. Did the business?
5 min read•By Satyajit Sen
Our rating system has guided millions of investors in the past 20 years.
Top Rated Stocks
All stocks with 5-star Value Research Ratings
High Quality Small Caps
Small-cap stocks rated high on quality score
High Growth Large Caps
Large-cap stocks with a high growth score
Value Meets Momentum
Top momentum stocks with a high valuation score
Top Rated Banks
Banks that rate high on Value Research Stock Ratings
Ask Value Research
In these short videos published on a daily basis, Value Research CEO Dhirendra Kumar answers readers’ questions on saving and investing.
Big Questions
Articles that address some of the biggest questions on top of investors’ minds.
Factor Insight
Fund Advisor
Fund Advisor’s Note
Home Buyers’ Guide
Personal Finance Insight
The Plan
A regular feature in which we draw out a financial plan to help investors reach specific goals.
alphanso
First Page
Value Research CEO Dhirendra Kumar reflects on pressing issues facing investors today and shares timeless advice to keep them on track.
Investment Acorns
Investors’ Journeys
NPS
Articles about the National Pension System aka NPS, published on Value Research Online.
Straight Talk
Archive of articles written by Anand Tandon, published on Value Research Online.
Special Report
Catch the latest webinars and updates on new issues here.
The Index Investor
Smart, low-cost investing made easy with broad market exposure and long-term focus.
Data for Thought
Articles that contain data analysis of stocks, mutual funds and other investment vehicles.
IPO Analysis
Our analyses of IPOs will answer important questions on the company’s fundamentals, business model, strengths, weaknesses, and of course the valuation of the stock.
Sector Playbook
Valuable, in-depth insights into various sectors of the market
Stock Advisor
Value Research Stock Advisor is a premium service that provides subscribers with thoroughly-researched stock recommendations with regular updates. The stories here draw from the Stock Advisor team’s experience researching companies.
Fund News
Check updates from Mutual Funds on dividends, changes to exit loads, NFO announcements, and more.
Fundwire
News, analysis and features on mutual funds.
Marketwire
Archive of articles about the stock markets in India – their valuations, crashes, upward trends and more.
Newswire
Archive of news updates related to investment regulations, stock markets, mutual funds and more.
Stockwire
News, analysis and features on stocks.
Back to Basics
Cover Story
Fund Focus
Fund Focus is an archive of articles on specific mutual funds and AMCs published on Value Research.
Insurance
Before investment comes insurance. Here, we provide guidance on buying adequate cover for you and your family.
Interview
Insightful conversations on the markets, funds, and what matters right now.
Learn
Learning
Useful articles to help you invest better, whether you are a new investor or well into your investment journey.
New Issue Announcements
Updates on new issues of Mutual Fund Insight and Wealth Insight magazines.
Reader’s Voice
The Systematic Edge
The Systematic Edge is a new interview series on specific fund managers and AMCs.
Videos
Words Worth
Archive of articles that focus on the investing philosophy of masters like Warren Buffet, Walter Schloss, Charlie Munger and more.
Quick Links
Newsletters
Resources
Premium Offerings
Value Research helps simplify the seemingly complex world of investing, helping you understand it and navigate it.
Redirecting you to MF Central in
You’ll be redirected to MF Central shortly. Complete the process there, then return to Value Research to upload the QR code and finish importing your portfolio.
Still Confused? Read The Quick User Guide
Upload the QR Code
Please upload the QR code downloaded from the MF Central platform in the field provided below
Click to upload QR file
Maximum file size : 5MB (JPG, PNG, PDF)
Seems like you’ve uploaded a wrong QR code. Please upload the QR code downloaded from MF Central platform.
Need to Re-Initiate? Go back to MF Central Platform
Complete the 5-step journey
Notifications
Sign up to get access
Take charge of your investments with Value Research Premium
Already have an account? Log In
Unlock Custom duration
Please subscribe to Value Research Fund Advisor to unlock the custom duration feature and enhance your experience.
Recommendations for the best investments and allocations that are most optimal for your goal
Backed by research by a team of investment experts with over 30 years of experience
Continuous analysis and support from our team to make sure your goals stay on track
Share on Social media
Leave a Reply