Revenue growth no longer covered rising costs

Q2 revenue
₹952.52 croreConsolidated revenue from operations, up 4.4% from the restated year-earlier figure.
Q2 group profit
₹39.80 croreProfit for the period, down 65.6% from the restated year-earlier figure.
Q2 EBITDA margin
13.28%CNBC-TV18 calculated 16.3% for the year-earlier quarter.

Kaynes Technology reported consolidated profit of ₹39.80 crore for the September quarter on 14 November, 65.6% below the restated ₹115.71 crore a year earlier. Revenue rose 4.4% to ₹952.52 crore, but CNBC-TV18 calculated that earnings before interest, tax, depreciation and amortisation fell 15.7% to ₹126.50 crore and the margin narrowed to 13.28% from 16.3%.

The decline was broader than the associate loss highlighted in the accounts. Finance costs rose to ₹38.73 crore from ₹13.26 crore, employee costs increased to ₹103.16 crore from ₹77.26 crore, and depreciation rose to ₹34.73 crore from ₹19.90 crore.

The parent company itself earned ₹97.07 crore after tax. Consolidated profit was ₹39.80 crore after adding subsidiaries and the ₹6 crore share of loss from Mixx Technologies, showing that the expansion businesses are consuming much of the established operation’s earnings. The filing did not identify the loss made by each subsidiary, limiting investors’ ability to judge which projects are responsible.

The earnings decline reflects weaker operating economics and losses outside the listed parent, not merely slower revenue growth.

Kaynes is funding expansion faster than its operations are producing cash.

Expansion is drawing on debt

H1 operating cash flow
Negative ₹278.41 croreThe outflow improved from a restated ₹404.18 crore in H1 FY26.
H1 capital expenditure
₹556.41 crorePurchases of property, plant, equipment, capital work in progress and intangible assets.
Total borrowings
₹1,809.78 croreUp from ₹1,393.66 crore at 31 March 2026.

Kaynes used ₹278.41 crore of cash in operations during the first half and spent ₹556.41 crore on property, plant, equipment, capital work in progress and intangible assets. The combined outflow was ₹834.82 crore before acquisitions and other investing movements. Operating cash use was lower than the restated ₹404.18 crore a year earlier, but the business still did not fund its investment programme.

Total borrowings rose by ₹416.13 crore from March to ₹1,809.78 crore at September. Cash and other bank balances fell from ₹655.41 crore to ₹106.68 crore, while inventories increased by ₹220.57 crore to ₹1,279.04 crore. Finance costs for the half year reached ₹75.86 crore, close to the ₹78.90 crore recorded for all of FY26 after restatement.

Kaynes is funding expansion faster than its operations are producing cash. Both qualified institutional placements disclosed in the results had been fully used by September, so further cash requirements must be met through collections, debt, subsidies, asset sales or new capital.

The balance sheet shows that borrowings, rather than operating cash, are increasingly funding investment and working capital.

Restatements weaken comparability

Q1 profit restatement
₹45.41 croreGroup profit was reduced from ₹56.43 crore.
H1 FY26 operating cash-flow restatement
Negative ₹404.18 croreThe previously reported outflow was ₹217.83 crore.
Mixx quarterly loss included
₹6 croreThe associate’s information was management-certified and not audited or reviewed by its auditor.

The accounts corrected material prior-period errors involving revenue recognition, inventory overheads, slow-moving stock, manufacturing-right amortisation, acquisition costs, leases, foreign exchange and the accounting for Mixx. Kaynes also reclassified bill discounting and supplier-finance obligations as borrowings. These corrections affect profit, working capital and debt, the figures investors use to assess an expanding manufacturer.

The restatements cut June-quarter group profit from ₹56.43 crore to ₹45.41 crore. They also changed the first-half FY26 operating cash outflow from ₹217.83 crore to ₹404.18 crore. FY26 profit moved in the other direction, rising from ₹363.89 crore to ₹391.52 crore after all adjustments, which shows why no single correction explains the result.

Walker Chandiok gave a modified review conclusion because Mixx’s financial information was neither audited nor reviewed by Mixx’s auditor, and alternative procedures could not be performed. The auditor could not determine whether adjustments were needed to the associate loss, dilution gain, investment carrying value or consequential figures.

Correcting the accounts is necessary, but the range of errors raises the standard of evidence required from future results.

The investment case still has support

June order book
₹8,903.8 croreReported by Kaynes after Q1 FY27.
OSAT and PCB FY27 revenue target
₹450 crore to ₹500 croreManagement’s target on the 8 August earnings call.
Q2 standalone profit
₹97.07 croreProfit after tax at the listed parent.

The strongest case against a negative reading is that Kaynes is in a planned investment phase. Its June order book was ₹8,903.8 crore, up from ₹7,401.1 crore a year earlier, and management said in August that orders added during the first quarter exceeded deliveries. The parent’s Q2 revenue rose 44.4% to ₹667.27 crore and standalone profit increased to ₹97.07 crore from ₹24.52 crore.

Management also said outsourced semiconductor assembly and test, known as OSAT, and printed-circuit-board production would begin commercial revenue in the third quarter. It targeted ₹450 crore to ₹500 crore of combined FY27 revenue from these businesses. If that capacity ramps up on schedule, depreciation and interest would be spread over more sales, while collections from smart-metering contracts could improve operating cash flow.

That case changes the conclusion from a judgement on permanent deterioration to one about execution risk. It does not remove the risk. The results filing gave no order-book update, commissioning status or OSAT and PCB revenue, even though half the financial year had elapsed.

The strongest positive case is credible, but it depends on new capacity producing revenue and cash quickly enough to offset its financing cost.

Monday’s call must supply the missing evidence

Q2 revenue poll
₹1,049 croreCNBC-TV18’s pre-result expectation.
Q2 profit poll
₹81 croreCNBC-TV18’s pre-result expectation.
Earnings call
16 November 2026Scheduled after the weekend results.

The result was below the CNBC-TV18 poll on revenue, EBITDA and profit. Revenue of ₹952.52 crore compared with the poll’s ₹1,049 crore, while profit attributable to shareholders of ₹45.42 crore compared with ₹81 crore expected. The shortfall matters because management had previously tied the investment programme to rapid growth and improving utilisation.

The 16 November earnings call needs to identify which subsidiaries produced the ₹53.87 crore aggregate quarterly loss reported by the auditors for nine subsidiaries reviewed by other auditors. Management also needs to explain when OSAT and printed-circuit-board billing starts, how much of the ₹450 crore to ₹500 crore FY27 target remains achievable, and whether smart-meter receivables are converting into cash.

The subsequent December-quarter filing will provide the harder test. It must show commercial revenue from the new plants, a smaller operating cash outflow and a lower consolidated loss outside the parent, with comparable figures that do not require another material restatement.

The next disclosures must reconcile the order book and new factories with cash receipts, margins and subsidiary-level losses.

Sources

  1. KAYNES TECHNOLOGY INDIA LIMITED · bseindia.com
  2. ANN_AGREEMENT_20675_WebXMLFile_20261115_001332109.xml · nsearchives.nseindia.com
  3. Kaynes Tech Q2 Results: Higher expenses result in earnings miss; Announces JV with Toyokawa Techno - CNBC TV18 · cnbctv18.com
  4. Kaynes Technology India Limited Q1 FY27 Earnings Conference ... · kaynestechnology.co.in
  5. ADDEPALLI SUDHASRI · kaynestechnology.co.in
  6. CORPORATE OVERVIEW - nsearchives.nseindia.com · nsearchives.nseindia.com
  7. Kaynes Technology Q2 Results: Net Profit Slides Over 61%, Margin Narrows · ndtvprofit.com