Shares of Kaynes Technology India Ltd. slipped 2.7% to ₹4,216 on Wednesday, extending weakness after Kotak Securities once again slashed its target price, citing fresh concerns around accounting clarity, working-capital pressure and risks to FY26 guidance.
Kotak Securities has maintained its ‘Reduce’ rating on the stock while cutting the target price sharply to ₹4,150, down from an earlier ₹6,180. The brokerage flagged that intangible accounting practices, elevated working capital levels and internal control issues remain unclear, placing near-term growth expectations at risk.
The stock has reacted negatively, falling from its previous close of ₹4,331 as investors reassess the company’s financial stability and transparency.
What triggered the sell-off?
Key concerns highlighted by Kotak and market reports
1. Inconsistent related-party disclosures
Subsidiary Iskraemeco has reported transactions with group entities that do not appear in Kaynes Technology or Kaynes Electronics Manufacturing’s disclosures, raising questions about reporting accuracy.
2. Overdue receivables from parent company
Iskraemeco has ₹45.8 crore in receivables pending for over a year, worsening worries about internal financial health.
3. Sharp rise in contingent liabilities
Contingent liabilities have jumped to ₹520 crore, now equal to 18% of net worth, adding potential balance-sheet risk.
4. Profitability at risk
Receivable discounting and necessary provisions may put pressure on profit margins and cash flows, according to brokerage commentary.
5. High borrowing costs
Kaynes’ average borrowing cost stood at a steep 17.7% in FY2025, raising concerns about interest burden.
6. Heavy capitalization of technical know-how
The company capitalised ₹1.8 billion (6.5% of FY25 revenue) toward technical know-how, designs and prototypes – an aggressive accounting choice that brokers believe requires more clarity.
7. Worsening cash conversion cycle
Kaynes Electronics Manufacturing’s cash conversion cycle deteriorated by 119 days YoY, indicating heightened working-capital strain.
8. FY26 guidance at risk
Kotak believes that positive operating cash flow, improved internal controls and timely execution of PCB and OSAT expansions will be crucial for FY26 — and risks appear to be rising.
With multiple financial red flags and renewed analyst downgrades, investor sentiment has weakened, contributing to the stock’s drop.
