Kernex Microsystems has provided a detailed progress update on its Chittaranjan Locomotive Works (CLW-II) order, confirming that execution is on track with a significant portion of units already delivered or in advanced stages of completion. The company anticipates fulfilling the entire order by November 2026.

CLW-II order execution status

The following table summarises the current status of units under the CLW-II order:

Of the 1,664 units yet to be delivered, 175 units are ready for dispatch during the current month, while 1,025 units are described as almost finished (approximately 95% complete). Together, these two categories account for 1,200 units that are at or near completion, reflecting advanced progress on the outstanding portion of the order. The company has planned for a minimum of 500 units to be dispatched in each of September and October 2026.

Installation and warranty obligations

Upon completion of dispatches, Kernex Microsystems will have approximately two months, up to February 5, 2027, to complete balance installation and commissioning formalities. The contract includes a warranty period of four years from the date of issue of the completion certificate. The contract price is inclusive of this warranty obligation, with no separate consideration payable. In accordance with Ind AS 37, the company recognises a provision for expected warranty costs rather than recognising costs only when claims arise.

Following the warranty period, the company expects to earn Annual Maintenance Contract (AMC) revenue at approximately 3% of the capital cost per annum for 11 years, subject to contractual terms.

Diversification into other verticals

Beyond the CLW-II order, Kernex Microsystems is diversifying its business into other verticals. As part of this initiative, the company has secured an order amounting to approximately ₹15.90 crore, as previously intimated in May 2026.

Kernex Microsystems delivered strong financial results for the first quarter ended June 30, 2026, reporting a consolidated net profit of ₹10,984.57 lakh, compared to ₹741.21 lakh in the same period last year. The company’s revenue from operations for the quarter was ₹50,358.23 lakh, marking a substantial increase from the previous year’s ₹5,592.99 lakh.

The firm’s operating efficiency improved alongside top-line growth. Kernex Microsystems recorded a profit before tax of ₹14,813.71 lakh, up from ₹955.18 lakh in Q1FY26. After accounting for a total tax expense of ₹3,829.14 lakh, the profit for the period came to ₹10,984.57 lakh. The basic earnings per share (EPS) for the quarter were ₹65.37, compared to ₹4.45 in the corresponding period last year.

Financial Performance

The company’s total income for the quarter stood at ₹50,406.74 lakh, driven by revenue from operations of ₹50,358.23 lakh and other income of ₹48.52 lakh. Total expenses were recorded at ₹35,593.03 lakh.

What the Numbers Show

The simultaneous expansion in both absolute profitability and operating margins indicates improved cost control or favorable product mix dynamics. With profit before tax growing at a faster pace than revenue relative to their respective bases, the data suggests that operational leverage is playing a key role in the bottom-line surge. The significant rise in other expenses (from ₹316.21 lakh to ₹4,093.93 lakh) includes a provision of ₹30.05 crore towards warranty obligations on KAVACH and signalling systems, which impacts the margin expansion trajectory.

Corporate Governance Updates

The Board of Directors, in a meeting held on August 13, 2026, approved the Un-Audited Standalone and Consolidated Financial Results for the quarter ended June 30, 2026. The Board also transacted the following items:

• Took note of the Limited Review Report on the financial results by statutory auditors NSVR & Associates LLP.
• Re-appointed Mr. Badari Narayana Raju Manthena (DIN: 07992925) as Whole Time Director for three years w.e.f. September 2, 2026. He serves as Chief Administrative and Commercial Officer.
• Re-appointed Mr. Sitarama Raju Manthena (DIN: 08576273) as Whole Time Director for three years w.e.f. September 2, 2026. He holds a Bachelor's Degree in Computer Science with a Minor in Business Administration.

Auditor's Emphasis of Matter

The independent auditors highlighted an emphasis of matter regarding the recoverability of certain financial assets:

• Trade receivables from customers amounting to ₹422.73 lakh (outstanding for more than three years) with an Expected Credit Loss (ECL) provision of ₹334.59 lakh.
• Bank guarantees amounting to ₹265.03 lakh given to one customer are currently under arbitration/conciliation proceedings.

Management believes these assets are good and fully recoverable based on internal evaluation. The aggregate outstanding order book as on August 13, 2026, stands at ₹3,641 crore (including GST), with CLW being the major order under execution.