Kaynes Tech share selloff: Kotak vs JPMorgan, Morgan Stanley, Nomura. Here’s what brokerages are saying

Synopsis
Kaynes Technology’s steep decline has sparked intense scrutiny after accounting inconsistencies flagged by Kotak raised concerns over disclosures and smart-metre dependence. While this triggered the sell-off, most brokerages argue fundamentals remain intact, valuing the stock attractively despite working-capital stress and revised guidance. Analyst views remain divided but broadly constructive with improvement triggers ahead.
Kaynes Technology’s bruising 40% slide over the past month has turned into one of the most closely tracked corrections in the mid-cap tech manufacturing space, triggering a flurry of brokerage reactions that range from sharply lower target prices to bullish valuation calls. The stock’s collapse began soon after Kotak Institutional Equities flagged inconsistencies in the company’s FY2024-25 disclosures, particularly around related party transactions.
Kotak’s note, released last week, pointed to mismatches between Kaynes Technology and its subsidiaries, especially Iskraemeco. According to Kotak, Iskraemeco reported purchases of Rs 180 crore from Kaynes Electronics Manufacturing in FY2025, along with year-end payables of Rs 320 crore to Kaynes Technology and Rs 180 crore to Kaynes Electronics Manufacturing. It also disclosed receivables of Rs 190 crore from Kaynes Technology. The brokerage said the combination of these numbers raised legitimate concerns around disclosure clarity and the flow of inter-company transactions, an issue that quickly turned into the catalyst for the sell-off.
Beyond the accounting concerns, Kotak underscored pressure on Kaynes’ FY2026 guidance. The company’s 1HFY26 revenue was heavily driven by smart metres, while the rest of the business saw only marginal growth. With smart meter revenue expected to slow to roughly Rs 300 crore in 2HFY26 from Rs 500 crore in the first half, Kotak said Kaynes’ EMS guidance appears vulnerable. The math is challenging: the EMS business excluding smart metres would need to grow at nearly 90% in the second half—“a tall ask,” Kotak wrote. While Kaynes’ multi-layer PCB capex of Rs 1,400 crore remains on track, the brokerage noted that other planned expansions are still under feasibility assessment, prompting its forecast of elongated execution across HDI PCB and CCL projects.
But even as Kotak’s concerns triggered the initial selloff, not all brokerages see the same degree of fundamental risk.
JPMorgan, earlier this week, argued that the 40% slide has turned Kaynes into the cheapest stock in its entire coverage universe. The brokerage reiterated its Overweight rating, pointing out that the stock now trades at just 0.7x PEG-well below the peer average of 1x despite no deterioration in revenue or margin outlook. JPMorgan attributed the pressure to worries over working capital and receivables following the second quarter. Kaynes’ net working capital rose to 116 days in 1HFY26 from 87 days in FY25, driven largely by the smart meter business, which typically carries a 90-120 day cycle versus the core business’s 60-90 days.
Live Events
Even under a harsh bear-case scenario, where working-capital days stay elevated at 116 through FY26-35, the brokerage said the stock would still deserve a fair value of Rs 4,900, implying a 26% upside from current levels. JPMorgan expects receivables and working capital to normalise over the next two quarters, reinforcing its stance that fundamentals remain intact.
Nomura, meanwhile, maintained its Buy call but slashed its target price significantly to Rs 5,455 from Rs 8,478. The brokerage said the steep correction has stemmed mainly from concerns around accounting and collection issues in the smart meter segment, but emphasised these appear to be “reporting and execution issues,” not governance lapses.
Nomura cut FY26-28F revenue estimates by 5–9% and lowered EBITDA margin assumptions by 30 bps, resulting in an 8-14% EPS downgrade. It also trimmed the stock’s target P/E multiple to 35x from 50x, placing it at the lower end of Kaynes’ historical 35-55x band. Still, Nomura said the stock remains attractively valued at around 26x FY28F P/E (adjusted for subsidiaries), backed by an expected 40% EPS CAGR through FY26-28F. It added that working capital could fall below 90 days by FY26F from 113 days in the first half, while new business ramps and cleaner disclosures may act as catalysts.
Morgan Stanley echoed a more neutral tone, retaining Equal-weight with a target price of Rs 6,155. The brokerage flagged improving disclosures, stronger internal software systems and the likelihood of Kaynes turning operating cash flow positive by FY26. It also expects government subsidies kicking in from the third quarter of FY26 to support cash flows, while backward integration into copper-clad laminates and prepregs should help margins over time.
Taken together, the messaging from brokerages is clear: concerns raised by Kotak have rattled the market, but most analysts still see value as long as the company improves disclosures, eases its working capital stress and delivers on its expansion roadmap.
After a 10% fall in the previous session, Kaynes Tech’s share price gained over 4% to its day high of Rs 4,129 in the afternoon.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)
(You can now subscribe to our ETMarkets WhatsApp channel)
(What's moving Sensex and Nifty Track latest market news, stock tips, Budget 2025, Share Market on Budget 2025 and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .)
Subscribe to ET Prime and read the Economic Times ePaper Online.and Sensex Today.
Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price
...moreless
(You can now subscribe to our ETMarkets WhatsApp channel)
(What's moving Sensex and Nifty Track latest market news, stock tips, Budget 2025, Share Market on Budget 2025 and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .)
Subscribe to ET Prime and read the Economic Times ePaper Online.and Sensex Today.
Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price
...moreless
How Escorts plans a comeback after Kubota takeover slowed it
How push for AI-led productivity is raising risks for Indian IT cos
India’s newest airline is quietly prepping for IPO. Can it pull it off?
Is RBI taking a leaf out of Fed, BoJ to manage bond yields?
Stock Radar: Breakout from Ascending Triangle pattern makes Infosys an attractive buy check target & stop loss
Chaos at airports is also a reflection of … : 11 stocks from the tourism & hospitality space with upside potential of up to 33%
1
2
3