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.

Kernex Microsystems shareholders have approved key governance changes, including an increase in the Board’s borrowing powers and the creation of charges on company assets, following a postal ballot that concluded on July 29, 2026. The resolutions empower the management to secure additional funding and leverage company assets for financial flexibility. Shareholders also endorsed remuneration increases for three senior executives and the appointment of a new director, signaling continued support for the current leadership structure.

The voting process was conducted in compliance with Regulations 30 and 44(3) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, and Section 110 of the Companies Act, 2013. D. S. Rao, a practicing Company Secretary, served as the independent scrutinizer for the e-voting process facilitated by National Securities Depository Limited (NSDL). The record date for voting eligibility was June 26, 2026, with 43,096 shareholders registered at the cutoff.

All seven resolutions were passed with significant majority support. The special resolution to increase the borrowing powers of the Board of Directors received 99.84% affirmative votes, with only 7,936 shares voted against out of 5,072,484 polled. Similarly, the resolution to create a charge or provide security on company assets secured 99.75% approval, facing dissent from just 12,883 shares. These outcomes reflect strong shareholder confidence in the company’s capital strategy.

The ballot also included three special resolutions to increase the managerial remuneration of Whole-Time Directors M B Narayana Raju and M Sitarama Raju, and Managing Director Sreelakshmi Manthena. Each of these resolutions garnered approximately 98.75% support. Additionally, shareholders approved the appointment of Parvathi Manthena as a director with 98.94% assent. An ordinary resolution approving a related party transaction regarding the holding of office by General Manager (Operations) Alluri Sitarama Raju Manthena passed with 99.69% support.

Voting Dynamics and Compliance

Promoter and promoter group shareholders, holding 4,717,361 shares, participated heavily in the vote, casting 4,715,329 votes in favor of all resolutions without any dissent. Public institutional investors showed varied engagement, particularly on remuneration hikes, where they recorded higher dissent rates compared to non-institutional public shareholders. For instance, in the remuneration resolutions, public institutions voted against at rates between 16.39% and 17.90%, whereas non-institutional public shareholders opposed these measures at lower margins.

The scrutinizer’s report confirmed that the e-voting process was fair and transparent. Notably, in the related party transaction resolution, 15,000 votes cast by Mr. Badari Narayana Raju Manthena were excluded as he was identified as a related party. Furthermore, Mr. M B Narayana Raju’s votes were not considered in favor of his own remuneration hike due to his interest in the resolution. The results were published on the company website and NSDL’s e-voting portal on July 31, 2026.