Kaynes Technology India Ltd - Stock Analysis by Finology

The world is adding electronics to almost everything. Cars are becoming self-driving, electricity meters are becoming smarter, factories are becoming more automated and robot-operated, railways are becoming faster and safer, and medical machines are becoming more precise. All these products need reliable electronic systems inside them, from circuit boards and sensors to control units and testing. Kaynes Technology sits in this space, helping companies design, manufacture, assemble and test these critical electronic systems.

So, what does Kaynes Technology Actually Do?

The company does not usually sell products directly to consumers. You will not see “Kaynes” written on a car, train, meter or medical device. But Kaynes may be making the electronic board, control unit, sensor system, wiring assembly or testing system that helps these products work.

Kaynes works in ESDM, Electronics System Design and Manufacturing. In simple words, this means the company helps customers design, manufacture, assemble and test electronic systems. Its customers are mainly OEMs, Original Equipment Manufacturers, which means companies that sell the final product under their own brand. Kaynes has close to four decades of experience and has served 500+ customers across 30+ countries.

(Source - Finology Research Desk)

The business can be understood through three main parts:

• OEM Turnkey PCBA

This is the largest part of Kaynes business.

OEM Turnkey means Kaynes handles the full manufacturing responsibility for the customer. PCBA, Printed Circuit Board Assembly, means the green circuit board after chips, sensors and other small electronic parts are fitted on it.

In simple words, this is the electronic board that controls how a product works.

49% of Kayne’s FY26 revenue came from this segment. These boards can be used in vehicle lighting, steering controls, window controls, railway systems, medical machines, industrial controls and other electronic products.

 

• OEM Turnkey Box Build

This is the next step after making the circuit board.

Box Build means Kaynes assembles a larger part of the final product. It may include the circuit board, wires, casing, sensors, display, software and testing.

In simple words, PCBA is like making the electronic brain, while box build is like putting that brain inside a usable product.

22% of revenue came from this segment in FY26. This is better than only making boards because Kaynes becomes more deeply involved in the customer’s product, which can improve customer stickiness and increase the value of work done per product.

 

• ODM, Product Engineering and IoT Solutions

ODM means Original Design Manufacturer. This means Kaynes does not only manufacture the product, but can also help design it.

Product Engineering means helping customers develop the product, improve the design, create prototypes and make it ready for manufacturing.

IoT means Internet of Things. In simple words, these are devices that can collect data and communicate, like smart meters, sensors and connected industrial devices.

28% of revenue came from this segment in FY26. This part is important because it moves Kaynes from being only a manufacturer to becoming a design and technology partner.

(Source - Company)

Kaynes makes electronics for many industries. In FY26, Industrial, including Electric Vehicles, contributed 55% of revenue, Automotive contributed 25%, IoT, IT, Consumer and Others contributed 10%, Railways contributed 6%, while Aerospace, Strategic Electronics and Medical contributed 2% each.

(Source - Company)

The company’s products can include automotive lighting boards, steering control boards, smart energy meters, street light controllers, railway signalling electronics, medical equipment electronics, barcode scanners, RFID gateways, sensors and defence-related electronic assemblies. RFID means Radio Frequency Identification, which is used for tracking and identification through radio signals.

(Source - Company)

So, the simple way to understand Kaynes is this:

Kaynes is a business-to-business electronics company. It helps other companies make the electronic systems that go inside cars, factories, smart meters, railways, medical machines, aerospace and defence products. It earns money by designing, manufacturing, assembling and testing these electronics for its customers.

Now, Let's Look at the Financial Performance of Kaynes Technology

The company has scaled consistently over the last few years, but the quality of growth needs to be seen through three lenses: profit and loss, order book, and balance sheet.

Revenue has grown from around ₹368 crore in FY20 to ₹3,626 crore in FY26, almost a 10x jump in six years (CAGR of 46%). Even between FY24 and FY26, revenue doubled from ₹1,805 crore to ₹3,626 crore, showing that Kaynes has been able to convert the rising demand for electronics manufacturing into actual sales.

(Source - Company)

This growth has also flowed into operating profit. EBITDA, Earnings Before Interest, Tax, Depreciation and Amortisation, increased from ₹254 crore in FY24 to ₹411 crore in FY25 and ₹574 crore in FY26. EBITDA margin improved from 14.1% to 15.1% and then to 15.8%, which means the company is earning better operating profit from every rupee of sales.

However, final profit growth was slightly softer in FY26. PAT, Profit After Tax, increased from ₹183 crore in FY24 to ₹293 crore in FY25 and ₹364 crore in FY26, but PAT margin declined from 10.8% to 10%. This is because Kaynes is in an expansion phase, where depreciation, finance cost and tax expenses are rising. Depreciation alone increased from ₹45 crore in FY25 to ₹107 crore in FY26 as new assets started getting added.

(Source - Company)

The order book also gives strong visibility. It increased from around ₹352 crore in FY20 to ₹6,597 crore in FY25 and ₹8,366 crore in FY26. Order book simply means confirmed orders that are yet to become revenue. So demand looks strong, but execution remains critical because these orders still need to be manufactured, delivered, tested and approved.

(Source - Company)

The balance sheet also reflects this aggressive expansion. Gross block, which means the original cost of tangible assets like plants and machinery, increased from ₹328 crore in FY24 to ₹626 crore in FY25 and ₹1,332 crore in FY26. Total assets also rose from ₹3,265 crore to ₹6,894 crore. This shows Kaynes is investing heavily in future capacity, including newer areas like PCB, Printed Circuit Board, manufacturing and OSAT, Outsourced Semiconductor Assembly and Test.

The main concern is working capital and cash flow. Net working capital days increased from 87 days in FY25 to 125 days in FY26. Inventory days moved from 84 to 134 days, receivable days from 91 to 97 days, and trade receivables jumped from ₹575 crore to ₹1,528 crore. This means more money is getting blocked in inventory and customer payments.

(Source - Company)

This is visible in cash flows as well. Despite a profit before tax of ₹504 crore in FY26, the net operating cash flow was negative at around ₹600 crore, mainly due to higher inventory and receivables.

So, Kaynes is clearly growing fast, but it is still an expansion-heavy business, not yet a mature cash-generating one. From here, the key monitorable is whether the company can convert its large order book into revenue while improving working capital, cash flows and execution consistency.

But Where Will the Next Leg of Growth Come From?

The next leg of growth for Kaynes will come from a simple trend: more products are becoming electronic.

Earlier, electronics were mostly linked with mobiles, TVs and computers. But today, electronics are going deeper into cars, factories, smart meters, railways, medical devices, defence systems and energy infrastructure. As these products become smarter and more connected, they need more PCBA. They also need more sensors, controllers, embedded software and testing.

India’s ESDM, Electronics System Design and Manufacturing, market is expected to grow from around ₹2.09 lakh crore in FY23 to nearly ₹9 lakh crore by FY28. That implies a strong growth rate of around 34% CAGR. This is the broad industry where Kaynes operates.

 

(Source - Company)

The opportunity is also large in PCBA. This is the core electronic part inside most products. India’s PCBA market is expected to grow from around ₹2.31 lakh crore in FY23 to around ₹6.56 lakh crore by FY26, implying nearly 42% CAGR.

(Source - Company)

Now compare this with the global market. The global ESDM market is expected to grow from around US$984 billion in CY23 to US$1,203 billion by CY27, which is only around 5.2% CAGR. Similarly, the global PCBA market is expected to grow from US$650 billion in CY23 to US$740 billion by CY26, a CAGR of around 4.4%. This presents an opportunity for Kaynes, as it has a presence in more than 30 countries.

So, globally, electronics manufacturing is already a large and mature market. But India is still in the high-growth phase. That is the real opportunity for Kaynes.

Kaynes Technology is growing by using both Indian and global markets in different ways. In India, the company is benefiting from large opportunities such as the deployment of 250 million smart electricity meters and railway safety upgrades, which can drive strong volumes. At the same time, as global companies look to diversify their supply chains away from China, Kaynes is expanding its international presence through strategic acquisitions in North America and Europe. These foreign entities now contribute around ₹300 crore to revenue  (~8% of total revenue) and also give the company access to higher-margin and advanced technology opportunities.

So, the industry tailwind is clearly strong.

What is Kaynes Technology Doing to Capture This Opportunity?

Kaynes is trying to capture this opportunity by moving from a pure electronics manufacturing company to a more integrated electronics player. In simple words, it does not want to only assemble electronic boards for customers. It wants to participate in more steps of the electronics value chain, from the board level to semiconductor packaging and final product integration.

One major step is PCB, Printed Circuit Board, manufacturing. A PCB is the basic board on which chips and electronic components are mounted. India’s PCB, Printed Circuit Board, market is expected to grow from around US$6.3 billion in 2024 to US$24.7 billion by 2033.

Kaynes is setting up its PCB facility in Chennai through Kaynes Circuits. The facility is expected to support around 5 million square metres of PCB manufacturing capacity in India and will make products like multilayer PCB, rigid-flex PCB, HDI, High Density Interconnect, PCB and flexible PCB. These are used in areas like telecom, medical, auto-EV, strategic sectors and smartphones.

(Source - Company)

The second big move is OSAT, Outsourced Semiconductor Assembly and Test, which simply means the stage where semiconductor chips are packaged, assembled and tested after they are manufactured. Kaynes’ OSAT pilot line, or Unit 1, is already operational, and Unit 2 is expected to become operational by July 2026. The company has also launched India’s first commercial multi-chip module from its Sanand OSAT facility and is shipping IPMs, Intelligent Power Modules, to AOS, Alpha and Omega Semiconductor. Mass production is expected to ramp up by July 2026.

(Source - Company)

This is important because Kaynes wants to connect three parts of the electronics chain: PCB, EMS and OSAT. EMS, Electronics Manufacturing Services, means manufacturing electronic products for customers. If the company can bring PCB manufacturing, electronics assembly and chip packaging together, it can offer customers a more complete solution instead of only doing one part of the job.

The company is also trying to move towards more product-led revenue. Management said Kaynes earlier took 12 to 18 months to launch a new product, but with new technology and product teams, it can now launch products in around 9 months. It also expects 30% of revenue in the coming years to come from new products. This matters because product-led work can improve standardisation, working capital management and margins over time.

So, Kaynes’ strategy is clear. It is expanding into PCB manufacturing, scaling OSAT, strengthening manufacturing capabilities and trying to launch more new products faster. Kaynes wants to capture a larger share of India’s electronics opportunity. But because the company is scaling many new areas at the same time, execution will remain the most important thing to track.

But What Can Go Wrong with Kaynes Technology?

Kaynes is moving into businesses like smart meters, PCB, manufacturing, and OSAT. These businesses can require higher inventory, longer customer approvals and delayed payments. So, even if revenue grows, cash flow may remain under pressure if working capital does not improve.

Smart meters are a growth driver, but they also have a heavier working capital cycle. The business generated around ₹971 crore revenue in FY26, nearly 27% of consolidated revenue, but carried around ₹1,365 crore of receivables and related exposure. This means a large part of cash is getting stuck in this business.

Kaynes is entering PCB manufacturing and OSAT. These are large opportunities, but they need heavy capex, customer approvals, stable quality, high utilisation and technical capability. If the ramp-up is slower than expected, depreciation and fixed costs may start before meaningful revenue comes in, which can hurt return ratios.

There were concerns around related-party disclosures between group entities. The company clarified that the transactions were eliminated at the consolidated level, but some standalone disclosures were inadvertently missed. This does not prove fraud, but it does reduce comfort. For a company scaling through subsidiaries and new businesses, clean disclosure and transparent reporting become very important.

As India’s electronics manufacturing opportunity grows, Kaynes will face competition from closer EMS peers like Syrma SGS and Avalon Technologies, along with larger ecosystem players in PCB and semiconductor packaging.

Kaynes Technology Peer Comparison

We have compared Kaynes Technology with Syrma SGS Technology and Avalon Technologies because these are among the closer listed peers in India’s electronics manufacturing space.

Metric	Kaynes Technology	Syrma SGS	Avalon Technologies
Market cap (₹ Cr)	22,779	20,305	10,275
Revenue (₹ Cr)	3,626	4,819	1,603
EBITDA Margin (%)	16%	11%	11%
PAT Margin (%)	10%	7%	7%
Order Book (₹ Cr)	8,366	6,600	2,196
Net Working Capital (Days)	125	63	112
Debt to equity	0.19	0.12	0.30
ROCE (%)	13%	17%	21%

Kaynes, Syrma SGS and Avalon are all EMS/ESDM players, and all three are moving towards higher-value work.

The difference is in their growth route. Kaynes is taking a more aggressive and capital-heavy path through PCB manufacturing, OSAT, product engineering, IoT and complex box build. Syrma is improving its mix through ODM, exports, MedTech, defence and PCB, while Avalon has a stronger share of box-build and high-reliability electronics, supported by its India-US manufacturing presence.

Among the three, Kaynes stands out on profitability and order book visibility. Its EBITDA margin of 16% and PAT margin of 10% are better than Syrma SGS and Avalon, both of which have margins of around 11% EBITDA and 7% PAT. Kaynes also has the strongest order book at ₹8,366 crore, compared with ₹6,600 crore for Syrma SGS and ₹2,196 crore for Avalon, giving it better revenue visibility.

However, the key weakness is working capital and capital efficiency. Kaynes’ net working capital days stood at 125 days, much higher than Syrma SGS at 63 days and above Avalon at 112 days. Its ROCE of 13% is also lower than Syrma SGS at 17% and Avalon at 21%. This shows that while Kaynes is growing fast, a large amount of capital is still getting blocked in the business.

Kaynes has a strong growth opportunity and a better margin profile than peers, but the business is still in an expansion-heavy phase. For us, the key comfort will come when the company starts converting its order book into revenue without further pressure on working capital, and when cash flows and return ratios begin to improve.

Kaynes Technology Valuation Analysis

Valuation also does not leave enough comfort. In our valuation, we have assumed 15% EPS CAGR for the next 10 years, which is lower than Kaynes’ recent 5-year EPS CAGR of around 31.6%.

This is because the next phase of growth may not be as easy as the past. Kaynes has scaled rapidly from a smaller base, but now the business is becoming larger, more capital-intensive and more complex. The company is also entering new areas like PCB manufacturing and OSAT, which can create long-term value but will need time to stabilise.

We have assumed an exit PE, Price-to-Earnings, multiple of 40x in the 10th year. This is lower than the current PE of around 61x, because as the company matures, the valuation multiple may gradually moderate. A 40x multiple still assumes Kaynes remains a high-growth, high-quality electronics manufacturing business.

We have used a 12% discount rate, as this broadly reflects the long-term return expectation from Indian equities. We have also kept a 20% margin of safety to protect against execution delays, weaker cash conversion, slower ramp-up of new businesses or valuation correction. Investors who want more comfort can use a higher margin of safety of 25% to 30%.

So while Kaynes remains a strong business with a large order book, healthy margins and exposure to long-term themes like electronics manufacturing, PCB, OSAT, industrial automation, EVs, railways, medical and defence electronics, the current valuation already prices in a lot of future growth. From a risk-reward perspective, we would prefer a better margin of safety before considering it attractive.

(Source - Finology Ticker)

Disclaimer: This is only for educational purposes and not investment advice.

Why have we rejected Kaynes Technology from Finology 30?

The business is becoming more complex. Kaynes is no longer only an electronics manufacturing company. It is trying to scale multiple areas at the same time, including core EMS, smart meters, PCB manufacturing, OSAT and product-led work. Each of these businesses needs different capabilities, customer approvals, working capital and execution discipline.

At the same time, cash conversion remains a concern. The company is reporting strong revenue and profit growth, but operating cash flow has not kept pace. A large part of growth is getting stuck in inventory and receivables, especially due to the smart meter business. For us, this is important because over the long term, profits need to convert into actual cash.

There is also some discomfort on disclosures. The company had faced concerns around related-party disclosures between group entities. While management clarified that it was not missed at the consolidated level and was an inadvertent disclosure lapse in standalone statements, it still reduces comfort.

So going forward, execution becomes more important than just opportunity size. Before revisiting our view.

These are the key things we would like to see:

• Operating cash flow is turning positive and improving consistently
• Working capital pressure is reducing meaningfully
• Better disclosure quality around subsidiaries and related-party transactions

A part of the EMS business can become commoditised if Kaynes remains limited to basic assembly work. In such cases, customers can compare vendors and negotiate hard on pricing. Competition from China and other large electronics manufacturing hubs is also a risk, as they have better scale, supplier ecosystems and cost advantages. So, Kaynes needs to keep moving towards higher-value work like design support, complex box build, testing and OSAT to protect margins.

At Finology 30, we prefer buying strong businesses with a reasonable margin of safety, a clean management record, a strong balance sheet, and healthy cash conversion. Currently, Kaynes does not fit our investment philosophy. That said, we will continue to track the sector closely and may consider investing whenever we find the right opportunity with favourable risk-reward.