Kaynes Technology shares rebounded 6% after an initial fall following its Q1 FY27 results. While revenue grew 40%, net profit fell 24.4% to ₹56.4 crore, pressured by higher costs and increased working capital needs. Investors are now focusing on the company's large order book and upcoming expansion plans in the OSAT and PCB segments.
Shares of Kaynes Technology experienced sharp volatility on Monday, bouncing back by nearly 6% after an initial drop of around 9%. The movement followed the company’s first-quarter financial results for fiscal year 2027, which were released after market hours on Friday. The company reported a 40% year-on-year revenue increase to ₹946 crore, but investors reacted cautiously to the bottom-line figures.
Earnings Impact and Margin Pressure
Despite the strong top-line growth, the company’s consolidated net profit fell 24.4% to ₹56.4 crore for the quarter. Profitability faced pressure as EBITDA margins contracted to 15.6% from 16.8% in the same quarter last year. This decline was largely driven by rising component costs, supply chain challenges, and higher depreciation expenses associated with the company’s recent capacity expansions.
While the core Electronics Manufacturing Services (EMS) segment—excluding the smart metering and August Electronics divisions—showed strong growth of 66%, the overall margin dip highlights the cost pressures currently facing the company. Management has acknowledged that fiscal year 2027 will be a challenging period, emphasizing that they are working to navigate these supply chain and cost hurdles.
The Working Capital Challenge
A major area of focus for investors is the company’s rising working capital requirement. Net working capital days have climbed to 163, up from 125 in the previous quarter. This increase is primarily attributed to delays in collections from the smart metering business and the need to build up inventory to manage ongoing supply chain disruptions. Because of these factors, the company is currently dealing with negative operating cash flow, which remains a key concern for analysts tracking the firm’s liquidity and financial health.
Brokerage Views and Future Outlook
Brokerage houses have shared mixed feedback following the earnings release. Some firms maintain a neutral stance, pointing to the weakened balance sheet metrics and the time needed to normalize working capital. Others remain positive, citing the company's strong order book, which stood at ₹8,903.8 crore as of June 30, 2026, as a foundation for long-term growth. Analysts are also closely monitoring the progress of the company’s new OSAT (Outsourced Semiconductor Assembly and Test) and PCB (Printed Circuit Board) facilities. These projects are expected to become operational in the third quarter of fiscal year 2027 and are seen as significant drivers for future revenue. The company has indicated that it expects to turn cash-flow positive by the end of the fiscal year, a milestone that will be a critical monitorable for investors in the coming quarters.