Target: ₹6,390
CMP: ₹5,793.10
In a recent sell-side meeting, Kaynes Technology disclosed its capital expenditure and funding strategies for the fiscal years 2026 to 2029. The company reiterated its revenue guidance for FY26 at approximately ₹45 billion and expressed confidence in reaching a $1 billion revenue target by early FY28, with an anticipated 25-30% contribution from OSAT (Outsourced Semiconductor Assembly and Test) and PCB (Printed Circuit Board) segments.
Kaynes has projected a total cash outlay of ₹11,400 crore over the specified period, with ₹8,500 crore earmarked for capital expenditures related to OSAT, PCB, and new initiatives under the ECMS (Electronics & Computer Software Promotion Scheme). The remaining funds will be allocated towards working capital (₹2,000 crore), core EMS (Electronic Manufacturing Services) operations (₹500 crore), and recent acquisitions. To support its funding requirements, the company expects to incur an additional debt of ₹1,960 crore, following a subsidy of ₹3,540 crore.
In the first half of FY26, Kaynes’ industrial revenue amounted to ₹930 crore, with an enterprise value of ₹180 crore; the industrial sector contributed ₹750 crore. Notably, the smart meter segment generated ₹450 crore, and the company anticipates that the smart meter business will achieve an annual recurring revenue (ARR) of ₹1,000-1,200 crore over the medium term.
Despite confidence in the company’s ambitious profit and loss targets, there remains uncertainty regarding a significant balance-sheet resolution, primarily due to the focus on aggressive growth and the B2B nature of its business operations.
Following the latest guidance on capital expenditures and debt, analysts have reduced their earnings per share (EPS) estimates for FY27 and FY28 by 3-5% due to increased financing costs, which include a higher reliance on bill discounting. This adjustment has led to a 4% decrease in the target price.
