KAYNES Kaynes Technology India Limited · Other Q3 FY26 · concall

Pattern: order book vs revenue

Refused to commit on risks 1bn target given.

Order book vs revenue — answer hedged.
Working capital trajectory 85 — answer hedged.
Other deferred orders besides — answer hedged.

3 deflections · 6 weak · 14 clean — pushback across 9 of 23 Q&A turns

Focused evidence 9 of 23

Siddhartha Bera · Nomuraweak

First question is on the revenue side. We have consistently been able to get good orders in terms of inflows and order book, but the gap in terms of execution seems to have widened a bit in terms of the growth in revenues. Can you talk us through some of these things? How long does the current order book get executed? And where have you seen some delays? And how do you expect this to translate into revenues in the next few years?

If you look at it, our order books are not cancellable. These order books, we have lead times, but customers don't take our products unless their entire project is aligned. So in a project when there is a slight alignment problem, then they hold certain inventories. So that is where the catch is. Then there are occasions where we have not yet got approvals from various agencies for starting deliveries and things like that. That is why against our plan, there is a shortfall of around 20%. But otherwise, we are still there, and there should not be any problem.

Sonali Salgaonkar · Jefferies Indiaweak

First question is regarding the working capital. This quarter, the working capital was elevated even sequentially, about 23 days higher as compared to September '25. What is the reason for this? And secondly, we maintain our guidance of bringing down the net working capital to 85 days by March '26. Could you help us understand exactly what journey or what steps will be embarked upon to bring that down because this seems like a sizable shift from 139 to 85 days within a quarter?

Fundamentally, the number of days calculation is based on revenues, which are generally recognized during that period. So, when you go to the end of the year, generally, the revenues, especially in the last quarter are much higher. So, in terms of leverage you will get in terms of number of days itself will be significant because last quarter, we do almost 35%, 40% of our entire sale. Most of these orders are custom-built orders. They are bespoke orders. And we do acquire materials because especially the environment is a little uncertain. So, we sometimes deliberately keep a little higher amount of inventory. And that evens out in the last quarter when the throughput from the company will be much higher. So typically, what we expect is about between 70 to 85 days. Last year, it was 85 days. So, you can expect about 85 days and better net working capital.

Sonali Salgaonkar · Jefferies Indiaweak

The spike this quarter is mainly because of the higher receivable days, same as last quarter. So what do you have in mind to bring down the receivable days? And secondly, the orders which are deferred - you mentioned in your television interview this morning that there is a deferral in the railways Kavach order worth INR3 billion. Is Kavach the only order which has been deferred or are there any more orders which we can expect in Q4?

There are many customers. We have almost close to 300-plus active customers. And of course, the top several customers, like 25, 30 customers bring in the most of the revenue. So obviously, something or the other keeps changing. This is a dynamic environment that we work in. So at this point in time, it happens to be Kavach because it's a safety critical item, and we have just made sure that the design that we put out doesn't need to have any upgrades, etcetera. The design we have is already approved, but we have decided to go for the next revision, which will give us better field performance, too. In terms of receivables, there are 2 ways in which we improve that. One is to discount at the customer's limit, which is like supply chain finance. The second thing is we are improving also the collection efficiency.

Sameet Sinha · Macquarie Capitalweak

You reiterated your $1 billion guidance for fiscal '28. Basically doubling from where you are right now. Can you break it up for us? Obviously, things have changed a lot in the last 9 months since you initially gave guidance. But how much of that is the core EMS, August, smart meters? Can you bridge that for us? Because I'm getting a number like a 30% organic growth rate.

On the growth, what we have projected $1 billion, we are still sticking on to that because for us, from our bare board, from our OSAT, additional buildings are going to take place. And for us, from our EMS, which is by the time going to be a lot of indigenization taking place because of the government compulsion. So, I am very certain and seeing the way the order inflow is happening, we are definitely going to reach there for those numbers. If you see our order pending on the aerospace, defense, then railways, then segments like Kavach, which is taking place. I'm very certain we achieving a number of $1 billion will definitely be achieved.

Manish Ostwal · Nirmal Bang Securitiesdeflection

Last year also, we have guided INR3,000 crores of revenue and end up INR2,700 crores. And in the beginning of the year, we guided at INR4,400 crores, now we are targeting INR4,100 crores. So, when you say the $1 billion revenue, what are the risks we are seeing which will hurt not to achieve those things? Can you elaborate those things?

While we have guided numbers for any particular period, we also said that our is not a quarterly basis. It's not as if the demand goes away and the orders are carried in the order book and then we plan for these orders anywhere between 6 months to 5 years time frame, we get the orders in. So what happens is the orders get rescheduled. And on that, we don't have too much of control. As we see current trend, I think there is a fair bit of - let's say, it's evened out now. It's come to normalcy. And there are no postponements getting received from major customer groups. So that's why the guidance for quarterly number is not the appropriate way. There are 2 ways of looking at the company's performance. One is a leading indicator, other is the lagging indicator. Lagging indicator is the actual billing. Leading indicator is the order book. And order book health has been good. We are growing at about 50% per annum basis, and that's the monthly order inflow.

Meet Jain · Motilal Oswaldeflection

Just to understand this lower growth in 3Q. Is there any spillover and if it's regarding to which project or which segment of our business?

Like I said, the railway ramp-up did not happen. And as you know, railway, we have about 2 different distinct set of products. One is manufacturing, the other is ODM business. And there's a bit of a lag in both of them. So, we can look forward to this thing coming up in the fourth quarter and quarter later. Our orders are not momentary in nature. They are part of a project. So, what happens is this gets postponed. So, we don't want to comment on specific project because we make in a year about 6,000 different products for 300-plus customers. So obviously, there is a kind of a mix that keeps going up and down. What we can tell you, Meetji, is that there is no significant, let's say, concentration of something which has happened, which is like a trend. So, this is a normal thing that happens in our business.

Meet Jain · Motilal Oswalweak

Our guidance of around INR40 billion kind of - so this implies almost more than 70% growth in our 4Q numbers. So how comfortable are we in this number? Or this also includes some spillover, right?

If you ask me comfort, it is not very comfortable to grow at high rates. But then organization, which is growing and come to a stage like we have come, it does involve some little bit of pain, but it is doable. We are geared up to do these numbers that we are talking about. This is how it works. It has worked in the past, and it is how this business will continue to work in the short term in the future, too.

Viral Shah · ENAM Holdingsdeflection

Did you share the YTD capex number? I remember you saying INR400 crores will be spent in Q4. What would be the spend so far in 9 months?

I can share that separately. I'll just get the actual number done. But the only thing is, in principle, what we are saying is that we would not like to keep this money in the fixed deposits. We'd like to implement on a time line basis. So as soon as the milestone is received, we'll take the next step so that the businesses can start delivering cash flows earlier. So, I'd be happy to clarify that offline separately if you want to do an accounting of this exact capex that has happened and so on. So, we will get you that number. We'll publish that for everybody's benefit, not a problem.

Aditya Bhartia · Investecweak

The other clarification that I required was on the core business growth that you spoke about of around 40% for 9 months. Given that last year, we had Iskraemeco only in second half. So, INR500 crores was essentially split between third quarter and fourth quarter. And this year, in first half itself, we have done roughly INR500 crores, even if we assume no further revenues came in, in third quarter, even in that case, it's difficult to see how core revenue growth without Iskraemeco could have been more than 20% in 9 months. So where am I getting the calculation wrong?

You're not getting any calculation wrong. It is just that we are executing other orders, too. Out of this INR9,000 crores order that is there on hand, the quantum of smart meter orders is just about 20%. The remaining pertains to EMS business. So, we are getting those businesses also fired up in the fourth quarter. Automotive, for instance, there are many new clients. EV, there are new clients and there are new products. Industrial non-meter-based products are there. Then there is railway other than Kavach also, there are businesses that we are working on. Aerospace orders have been hanging fire for a long time, sitting with us. So, there are orders available in every one of these segments, which are actually going to contribute. So, we are not dependent just on one particular thing to fire up.

▸ Other Q&A (14)

Siddhartha Bera · Nomura

In terms of the execution for the next few years, given this order book, how should we think about the ramp-up in revenues?

The ramp-up in revenues, if you notice, the order book, monthly order inflow has grown at about 11.5% for the quarter. That means the order book itself is growing at about 50%. And mainly all the orders that are locked in right now are all EMS orders. There aren't other orders like PC Board and OSAT, etcetera. So those orders will also probably get added. Our order book represents typically a 12-month rolling forward basis, it represents about 1.5 years' worth of orders, which continues to be valid even now. As we go forward, maybe some more orders will be available for future. So, the order book may grow at a rate higher than the actual sales growth because we will start covering the ground for a longer period than 1.5 years.

Achal Lohade · Nuvama Institutional Equities

If you could help us with the absolute value of the inventory receivable and payable. Because I'm wondering how the days are calculated. Are you annualizing the quarter? Are you taking trailing 12 months?

In terms of number of days, at the end of the year, it is the entire year's opening and closing divided by 2. And for the period also, it's opening plus closing divided by 2. Inventories are at about INR1,226 crores and receivables are at about INR1,249 crores and corresponding payables are at about INR970 crores. The non-current receivables would be about INR250 crores.

Renu Baid · IIFL Capital

What were the numbers of revenues coming in from the metering business? And how was the revenue growth ex metering for 9 months FY '26 and expected numbers for fiscal '26 overall? And in terms of our initiative to reduce overall net working capital, what is being done to reduce the long-term debtors from the metering business that we were carrying forward from Iskraemeco?

In terms of revenue, last quarter is going to be a busy quarter for us, and including the last quarter for FY '26, we'll cross about INR4,000 crores minimum and mainly driven by EMS revenues. About INR300 crores will be metering revenues out of this. In terms of receivables reduction, we have identified a bank with whom we will do funding that is funding the annuities payments, which are sitting in other noncurrent assets. We have done experimental discounting of about INR60-odd crores. And the remaining also, we will attempt to do that.

Renu Baid · IIFL Capital

What is the revenue growth ex of the metering segment or the line of business for 9 months FY '26?

It will be, by and large, around 40% actually. The growth has not come in metering segment. Growth has come in all other segments. So, we are getting back to our original diversified portfolio. Last year, we did about INR500 crores, INR600 crores of this metering business. And this year, not much more than that.

Sameet Sinha · Macquarie Capital

Can you specify how much, has any projections changed for your OSAT PCB business within that context?

Essentially, we don't plan in such a way that we exactly cut-to-cut planning. These 2 new projects, which are OSAT and PC Board, they are in the stage of final implementation of the first phase of factories. So, at the minimum, you can expect INR1,500 crores from our OSAT business. Similarly, you can expect about INR1,000 crores from PC Board business. Right now, we have agreements in place for OSAT 3 clients. So, we are looking at at least INR2,500 crores coming in. That does not mean that the EMS business is not going to grow. We are just making sure that we don't overcommit and build expectations, due to even environmental reasons, sometimes don't get fulfilled.

Indrajit Agarwal · CLSA

The industrial revenues look to have fallen this quarter Y-o-Y if you do a back of the envelope calculation. So, what has driven that? And second, a clarification - of the INR1,700 crores top line expected in 4Q, INR300 crores is smart metering. Is that correct?

Yes, that is correct. And also, the industrial down because of less reliance on smart meter does not mean that we don't want to deliver those, but it's just that it so happened that other businesses also fired up. So, we are getting back to our old, let's say, diversified portfolio approach, wherein we have almost 4 to 5 verticals individually firing up. So hopefully, the fourth quarter we'll have INR300 crores of smart meter, but the remaining will come from our traditional businesses, which includes railways, aerospace, automotive and other industrial, non-smart meter-based industrial, electric vehicles and so on.

Praveen Sahay · PL Capital

My question is related to the order book of INR9,000 crores. Can you give some color on the segment-wise, how is the order book? Is there any concentration on any particular sector?

No concentration at all. If you see how the pattern is, it is the same way because we supply to customers who are regularly doing production. So, we don't have a concentration of any, if you see our top customer is not more than even 6% of the overall turnover. And the trend is also like that only going forward also as of now.

Santhosh Seshadri · Avendus Spark

My question is whether are you consciously targeting away from the smart metering business given the working capital cycle there? Is there a way to realign this business to target export markets by utilizing the existing capacity?

We are not targeting away from any particular business. We are only changing our role into a device maker, which is our primary role. That is ODM solution maker wherein we design the product and we own the software and then we supply the device. We are only saying that we will be away from the AMISP business. But meter as a product, which we were doing it for the last 5, 6 years, we are continuing to do. We'll continue to do.

Neel Mehta · Equirus Securities

What will be your 9 months FY '26 OCF at the consolidated level? And what would be 9 months of capex? And it will be very helpful if you can bifurcate it to capex number within the core EMS segment, OSAT, and PCB project?

Fundamentally, actually, we kind of missed scoring a goal here. We are almost cash positive in the holding company level, which has never happened in the past. We are just about minus INR55 crores. We could have probably improved that too. And going forward, at consol level, we'll definitely be OCF positive by end of this year. So going forward, what will happen is the throughput of sales will increase. So this year, you can expect at consol level, definitely a significant positive operating cash flow. EMS segment, we have taken a strategy of improving the asset turnover by debottlenecking our existing investments. As far as the 9 months and the subsequent capex for EMS segment is concerned, we may not add significant one. Other businesses, there is already a DPR, the INR3,200 crores is the total capex for OSAT, INR1,400 crores is the total capex for PC Board. So, you can take broadly in this year, maybe about another INR400-odd crores of capex will be spent.

Viral Shah · ENAM Holdings

You guided for the full year, the smart metering business should do around INR700 crores to INR800 crores of revenue. Going into the next year, how are you looking at this number?

Going forward, this number will be going up because there are many AMISPs who will have to buy from people like us, people like Schneider, who are supplying as devices. My own peers are also supplying meters as devices. So the market demand is so high for the next 4, 5 years, year-on-year, there will be a growth of around 30%.

Naushad Chaudhary · Aditya Birla Mutual Fund

Clarification on the previous question - our ODM and product engineering order book is 20% of the total overall order book. Does that mean incrementally the gross margin should be in pressure because if I look at last 3, 4 quarters, the ODM and product engineering revenue share were quite high versus 20% of current order book?

No, you would not see much difference because the order book contains orders for those that we visibly see. Something like Kavach and those kinds of things are still yet not added to the order book because we need to get the final revision of product in the field first before we can recognize that order. So there would be opportunities. The 20% comment was basically the minimum amount of ODM business. And that's not the limit.

Naushad Chaudhary · Aditya Birla Mutual Fund

Based on the order book number, should we assume that ODM revenue share should remain around 20% of the overall revenue for next 1, 2 years at least? And on your ambition of taking it to 40% by '30, do you count your OSAT and PCB into your ODM? Or do you count that separately your pure EMS business should go to 40% ODM?

No, it will be higher, sir. The things like Kavach will start coming in. So they will come in chunks. So, it will be higher than that. I'm saying what currently in the order book is a minimum. That's something committed already. Once the correct version of Kavach is there in the field, we'll start buying material for that, and we'll start recognizing the orders in our order book. So that's a minimum. It can go up by about 5%, 7 percentage points going forward. Now it's a little tricky to say whether EMS business by itself will only will grow at that number. OSAT and PC Board are different businesses. They are not part of ODM. There is a part of ODM and OSAT too, which is like test engineering and all that. So that is a services business that is different. That's not counted in this 40% target.

Aditya Bhartia · Investec

Just wanted to clarify on the operating cash flow point. You're saying that we'll still be operating cash flow positive for the entire year. When I look at both inventories as well as receivables, those have gone up very sharply versus last year. So, we'll have to kind of recoup a fair bit of loss around in fourth quarter. So, have I understood correctly that operating cash flow positive for the entire year and not just for fourth quarter?

Yes. It will be certainly for the fourth quarter because the numbers are higher, but our target is consolidated for the whole year, we will be operating cash positive.

▸ Prepared remarks (4 blocks)

Good afternoon, everyone. On behalf of Kaynes Technology team, I would like to welcome everyone to the earnings call for quarter 3 FY '26. Mrs. Savitha Ramesh, Chairperson of our Board; our Managing Director, Dr. Muthukumar Narayanaswamy; our CFO, Mr. Jairam Sampath and Whole-Time Director; Mr. Sumit Verma, our Investor Relationship; and MUFG IR, our Investor Relationship Partners. Let me begin with a brief overview of our financial performances for 9 months period ended December '25. Our total revenue stood at INR23,837 million, reflecting a year-on-year growth of 37%. Operational EBITDA for the quarter was INR3,778 million, registering a growth of 55% over the same period last year. This translates into an EBITDA margin of 15.9%, an expansion of 190 basis points year-on-year. Profit after tax came in at INR2,726 million, representing a PAT margin of 11.4%. We have an order book of around INR90,000 million, which is pending with us. As reflected in the numbers, this quarter represents a phase of consolidation as we strengthen execution and prepare for the next phase of accelerated growth. Before I move ahead, I want to reiterate something that is fundamental to us at Kaynes, which is our deep commitment to our investors and shareholders and our responsibility to deliver outcomes that align with the confidence you place in us. Over the last few years, as we understood strategic initiatives with investments in background and parallel integration and building platforms for the future. There have been phases where the translation of strategy into near-term outcomes has taken longer in core EMS than anticipated. We recognize that this has tested patience, particularly in an environment where expectations are understandingly high. What is important however, is that this phase is behind us.

The actions required to realign execution with ambition have been taken and the organization today is operating with far sharper focus, strong discipline and highest accountability across all levels. I am encouraged by the fact that the building blocks of our long-term strategy are now firmly in place and progressing meaningfully. Our semiconductor journey has moved decisively from intent to execution. The OSAT facility at Sanand is now operational and steadily ramping up. A key area of concern for many stakeholders have been the approval of the FSA under the ISM framework for OSAT. I am pleased to confirm that this approval is now in place. In parallel, our PCB manufacturing initiative, a critical element of our backward integration strategy would significantly strengthen our control and position with customers over the electronics value chain. Unlike most companies, in our HDI PCB business, we are strategically focusing on high-end complex and multilayer PCBs for industries such as defense, aerospace, complex industrial segments, strategic electronics. This requires us to closely work with our customers right from the early design and development stages. This would help us as a group to have an edge and already be well positioned and entrance with the customers to tap into the full business potential of the PCB manufacturing plus PCB assembly with our strategic investment in the HDI PCB manufacturing. As we enter this next phase of our journey, we are focused on pairing our strategic relationships and leadership with consistent delivery excellence and sustained efficiency improvements. While this is a crucial transition phase for the near term. The directions ahead is far clearer. The execution engine is firmly engaged, and we remain confident in our ability to deliver sustained value for our investors and shareholders going forward.

Thank you, Rameshji, and good afternoon, everyone. Thanks for joining this call today. As we start the new quarter, I'm happy to share Kaynes Technologies financial results for the third quarter of FY '26, and I will share with you the highlights of the same. For the 9 months ended December 2025, the total revenue stood at about INR23,837 million, demonstrating a year-on-year growth of about 37%. Our operating EBITDA for the period came in at about INR3,778 million, making it an increase of about 55% year-on-year and resulting in an EBITDA margin of 15.9%, an expansion of 190 basis points over last year. Profit after tax reached INR2,726 million, corresponding to a PAT margin of 11.4%. Growth from the North American market through August Electronics integration is steadily building by unlocking specialized talent in the high-margin segments, including RF microwave assemblies, broadening our North American customer footprint and bringing proven capabilities. Accelerating the global EMS leadership by synergizing seamlessly with the OSAT for comprehensive end-to-end value creation. At Sanand, as indicated by our Executive Vice Chairman, the FSA approval is received.

This milestone meaningfully improves the visibility, especially with respect to capital subsidy from the central and state governments, it reduces uncertainty on cash flows and reinforces confidence in both our road map and its financial underpinnings. The new PCB HDI multilayer PCB facility coming up at Chennai gives us a strategic advantage. This would mean a business potential of about INR15,000 crores for the group from the customers from our current investment of INR1,500 crores in the HDI PCB manufacturing operations, assuming the general thumb rule of PCB to PCBA of 10% based on our own data. From the same clients, INR1,500 crores of PCB revenues and INR13,500 crores of EMS revenues are likely. At Kaynes, we remain committed to expanding our capabilities and geographic reach through strategic investments, amplifying innovation efficiency and holistic solutions for verticals like aerospace, industrial, automotive and airways.

Watch next

Whether the order book vs revenue hedge tightens to a number.
Whether the working capital trajectory 85 hedge tightens to a number.
Whether the other deferred orders besides hedge tightens to a number.