NEW DELHI: Electronics producer Kaynes Expertise on Friday reported an 11% sequential decline in December quarter (Q3FY26) income, at a time when its closest competitor, Syrma SGS grew at a gentle tempo.
In a post-earnings name, Kaynes’s high administration attributed the quarterly income dip to a one-time hit from delayed execution of Kavacha collection of sensors and digital security gear for Indian Railways.
“Many of the dip got here from a delay in execution of our Kavach order in our railways vertical, to the tune of ₹300 crore. Our orders are non-cancellable, however loads of occasions there are delays that happen due to extended durations of authorization from varied companies. The remainder of our enterprise stays sturdy,” stated Ramesh Kannan, founder and government vice-chairman of Bengaluru-based Kaynes.
Income for the December quarter stood at ₹804 crore, down 11% sequentially. Web revenue fell 37% from the September quarter to ₹77 crore. The revenue decline was pushed by a pointy rise in unsold finished-goods stock, which nearly doubled year-on-year to ₹43 crore and rose 7% from ₹40 crore within the September quarter.
Following the outcomes, Kaynes minimize its FY26 income steering to ₹4,100 crore from an earlier ₹4,400 crore. Administration attributed the whole downgrade to delayed deployment of Kavach merchandise for Indian Railways.
The Kaynes inventory had a unstable session on Friday, opening 5.4% decrease than Thursday’s shut earlier than reversing course to finish the day up 2.3%. The inventory is up 6.2% for the week.
Regardless of the strain on income and revenue, Jairam Sampath, whole-time director and chief monetary officer, stated the corporate stays assured of “producing optimistic working money circulation by the tip of this monetary yr, at a consolidated degree.”
“We have now actually labored laborious on OCF. You could suppose that I solely come right here and speak about OCF each quarter, however we’ve achieved loads of laborious work, and we might have turned money flow-positive throughout the December quarter itself. However we selected to not, and our internet money circulation for the quarter was at a damaging ₹55 crore,” Sampath stated.
Working money circulation and margins have change into a key focus throughout the electronics manufacturing companies (EMS) business, which has traditionally scaled on low-margin meeting operations and authorities production-linked incentives.
Syrma SGSwhich introduced its earnings on 29 January, turned money flow-positive throughout the December quarter. Syrma additionally reported a ten% sequential rise in quarterly working income to ₹1,264 crore, surpassing Kaynes’s December quarter efficiency.
Later, Jasbir Singh Gujral, managing director of Syrma SGS, informed Mint that the corporate might also enterprise into semiconductor initiatives—an area that Kaynes is banking upon for the subsequent two fiscals.
“Given the present contracts we’ve with shoppers and lively efforts underway to enhance OCF, we nonetheless count on to be on observe to realize $1 billion in annual working income by FY28. Whereas this could imply that our annual income will possible have to double throughout this era, we count on our new bets in Osat (outsourced semiconductor meeting and testing) and PCBs (printed circuit boards) to contribute ₹1,500 crore and ₹1,000 crore yearly throughout the subsequent two years, thus boosting our enterprise,” Sampath stated within the analyst name.
One week earlier than its earnings, credit standing company Icra LTd retained Kaynes’s A-negative credit standing, with a internet borrowing restrict of ₹780 crore to fund new initiatives.
“On the identical time, our design-led manufacturing, which presently contributes to at the very least 20% of our income proper now, can be prone to develop by 5-7 share factors within the subsequent two fiscals,” Sampath added.
Analysts stated that the corporate’s resilience will significantly come below the scanner relying on its potential to match the promised targets.
“Most of Kaynes’s initiatives are backed by the federal government’s incentives—together with the ECMS scheme approving Kaynes’s PCB mission, and ISM 1.0 approving Kaynes’s Osat. All of because of this the corporate has strong backing, and from its general order ebook, appears to be like prone to retain its development in the long term. Nevertheless, a lot will rely upon if Kaynes can flip money flow-positive by the continued quarter, and if it will probably see the expansion it has promised over the subsequent two quarters,” stated Harshit Kapadia, vice-president at brokerage agency, Elara Capital.