Kaynes Technology India Ltd fell nearly 6% on Thursday as investors reacted sharply to a series of corporate governance concerns and financial red flags raised by Kotak Institutional Equities in its latest annual report analysis. The brokerage flagged multiple inconsistencies in disclosures, rising liabilities, and weakening financial indicators — all of which triggered a broad sell-off in the stock.
Kotak highlighted mismatches in related-party disclosures, particularly between subsidiary Iskraemeco and the parent entities. According to the report, several inter-company transactions and year-end balances reported by Iskraemeco do not appear in the disclosures of Kaynes Technology or Kaynes Electronics Manufacturing, raising questions about transparency.
A major point of concern was Iskraemeco’s overdue receivables. The subsidiary has Rs 45.8 crore outstanding for more than a year from the parent company. Market commentators on CNBC Awaaz flagged this as a serious corporate governance issue.
The company’s contingent liabilities have also surged to Rs 520 crore, now equivalent to 18% of net worth, suggesting rising financial obligations. Analysts also warn that receivable discounting and provisioning could hit profitability and margins in the coming quarters.
Adding to investor anxiety, Kaynes’ average borrowing cost in FY2025 stood at a steep 17.7%, reflecting high interest burden and cash flow pressure. The company also capitalised a significant Rs 1.8 billion (6.5% of FY2025 revenue) under technical know-how expenses, including designs and prototypes, raising further scrutiny from analysts.
Meanwhile, Kaynes Electronics Manufacturing’s cash conversion cycle deteriorated by 119 days YoY, indicating rising working capital requirements and slower cash realization.
The stock remained under pressure throughout the day as the market digested Kotak’s pointed remarks on governance, disclosure quality, and financial transparency. Investors now await management clarification on the issues flagged in the report.
