Kaynes Technology India Limited held a comprehensive business update conference call on December 8, 2025, to address observations raised in a Kotak Institutional Equities report. The management team, led by Executive Vice Chairman Ramesh Kunhikannan and CFO Jairam Sampath, provided detailed clarifications on accounting practices and reaffirmed the company's strong business fundamentals.

Management Response to Key Observations

Iskraemeco Business Performance Clarification

The management corrected several factual inaccuracies in the Kotak report regarding Iskraemeco's performance. Contrary to the report's claim of 28% net margin in H2 FY25, the actual margin was only 9% with revenues of ₹327.00 million and PAT of ₹48.90 million.

The H1 FY25 loss was attributed to significantly lower revenue of ₹85.00 crores, unchanged fixed costs, provisions from due diligence including inventory write-offs, and broader corporate cleanup adjustments.

Goodwill and Intangible Assets Recognition

Kaynes provided detailed explanations of its acquisition accounting practices for Iskraemeco and Sensonic acquisitions in FY25:

The company recognized customer contracts worth ₹115.00 crores as intangible assets under technical know-how, representing design implementation knowledge, hosting, and communication packages for smart metering.

Intangible Assets Capitalization Breakdown

Kaynes clarified the ₹180.00 crores capitalized as technical know-how additions in FY25:

Working Capital and Financial Management

Receivables Management Strategy

The management outlined comprehensive measures to address working capital concerns:

• Smart Meter Receivables: ₹687.00 crores total, including current and non-current portions
• Discount Strategy: Approximately ₹240.00 crores to be discounted off books
• Collection Timeline: Target to maintain collection periods within 90 days
• Supply Chain Finance: Collaboration with foreign banks offering lower interest rates

Borrowing Cost Clarification

Addressing the 17.70% average borrowing cost observation, Kaynes clarified that including bill discounting, the actual interest cost works out to 10.00%, showing improvement from FY24's equivalent calculation of 25.30%.

Business Outlook and Growth Strategy

Revenue Projections and Segment Performance

For FY26, Kaynes projects strong growth across multiple verticals:

OSAT Initiative Progress

The company reported significant milestones in its semiconductor assembly and test operations:

• Client Acquisition: Three major clients - Alpha Omega Semiconductor, Infineon, and Larsen & Toubro
• Commercial Production: First shipments completed, making Kaynes the first in India to ship from this facility
• Funding Status: ₹10.30 billion requirement to be funded through QIP, internal accruals, and government subsidies
• Subsidy Management: Dedicated team established for efficient subsidy documentation and compliance

Governance and Compliance Improvements

Related Party Transaction Disclosure

The management acknowledged an inadvertent omission in related party transaction disclosures in standalone financial statements, which has been rectified. The company is implementing software solutions to ensure comprehensive contra entries for all related party transactions across subsidiaries.

Structural Enhancements

Ramesh Kunhikannan outlined planned improvements:

• Team Expansion: Additional personnel in taxation, finance, and manufacturing
• Leadership Enhancement: Bringing in more senior leadership
• Communication Model: Revisiting and improving stakeholder communication processes
• Internal Controls: Strengthening audit review processes and disclosure checks

Financial Position Update

As of the latest available data, Kaynes Technology's financial metrics show:

The management emphasized that despite the accounting disclosure oversight, there are no underlying governance concerns or business deterioration. The company remains focused on its long-term growth roadmap, with strong momentum in EMS business, OSAT initiatives, and high-end PCB programs positioning India meaningfully in the global semiconductor value chain.

Morgan Stanley has assigned an Equal-weight rating to Kaynes Technology India , setting a target price of ₹6,155.00 per share. The rating indicates the global investment bank's neutral outlook on the electronics manufacturing company's stock performance.

Morgan Stanley's Rating Assessment

The Equal-weight rating from Morgan Stanley suggests that Kaynes Technology India is expected to perform in line with broader market or sector benchmarks. This neutral stance typically indicates that the stock is fairly valued at current levels, with the investment bank seeing balanced risk-reward prospects.

Market Implications

Morgan Stanley's target price of ₹6,155.00 provides investors with a specific valuation benchmark for Kaynes Technology India shares. The Equal-weight rating places the stock in a neutral category, suggesting that while the company may have solid fundamentals, the current market pricing adequately reflects its near-term prospects.

The rating from Morgan Stanley, a prominent global investment bank, carries significant weight in institutional investment decisions and may influence trading patterns for Kaynes Technology India shares in the coming period.