Kaynes Technology shares fell over 8% after the company’s Q1 FY27 profit declined 24.4%, despite a 40.5% jump in revenue. While brokerage firm Prabhudas Lilladher maintained an 'Accumulate' rating with a ₹4,390 target, focusing on future OSAT and PCB growth, investors remain concerned about rising working capital needs and falling profit margins.
Shares of Kaynes Technology India faced selling pressure on August 10, 2026, dropping approximately 8.4% following the release of the company’s June quarter results. While brokerage Prabhudas Lilladher maintained a positive outlook on the stock with a target price of ₹4,390, the market’s immediate response focused on weaker-than-expected profitability.
The company reported a 40.5% year-on-year revenue increase to ₹946 crore for the first quarter of fiscal year 2027. However, net profit declined by 24.4% to ₹56.4 crore, missing analyst expectations. This disconnect between revenue growth and bottom-line performance highlights ongoing operational challenges.
Margin and Working Capital Pressures
The profitability margin, or EBITDA margin, narrowed to 15.5% from 16.9% in the same quarter last year. This decline reflects cost pressures, including potential component price inflation and high operating expenses. Furthermore, the company is dealing with elevated working capital requirements, as the number of days taken to convert sales into cash increased to 163 days, compared to 122 days previously. A significant part of this pressure is linked to the smart-meter business, where the collection of receivables has become a challenge.
Brokerage View on Future Growth
Despite these short-term hurdles, Prabhudas Lilladher continues to see long-term potential, forecasting that the company's revenue growth will significantly outperform the broader electronics manufacturing sector. The brokerage’s optimistic outlook is pinned on the company’s expansion into specialized areas like OSAT (Outsourced Semiconductor Assembly and Test) and Printed Circuit Board (PCB) assembly. Commercial revenues from these new segments are expected to start contributing meaningfully by the third quarter of fiscal year 2027.
To support these efforts, Kaynes Technology has secured new customers, including global European brands and an electric two-wheeler manufacturer. The company has also formed a strategic partnership with Mitsui to boost its semiconductor packaging capabilities. The firm is currently in a phase of heavy investment, leading to negative operating cash flow, but management has expressed confidence that this will turn positive by the end of fiscal year 2027.
Investors looking ahead will likely monitor the company’s ability to manage its working capital cycle and resolve the receivables issue in the smart-meter segment. The speed at which new strategic investments in OSAT and PCB begin to generate consistent cash flow will be another key metric to track in coming quarters. Additionally, the role of Walker Chandiok & Co LLP, recently appointed as the statutory auditor for a five-year term, will be a point of governance oversight.