Kaynes Technology India Limited is a leading end-to-end Electronics System Design and Manufacturing (ESDM) company, specializing in providing cutting-edge solutions across various industries. Established with a vision to drive innovation in electronics manufacturing, Kaynes offers comprehensive services, including design, prototyping, manufacturing, and testing of high-quality electronic components and systems.
The company operates across multiple sectors, including industrial automation, automotive, aerospace & defense, medical electronics, IoT, and smart meters, making it a key player in India’s electronics manufacturing ecosystem. With a strong focus on research and development, Kaynes has expanded its capabilities to include advanced semiconductor assembly and high-density PCB manufacturing, reinforcing its commitment to technological excellence.
In this article we will understand the insights of the Q3FY 25 earnings conference call by the management. so let’s begin
Financial update
The management started the conference with financial results for Q3 FY25 the highlights are
For the first three quarters
- Operating revenue for first three quarters – INR 17373 million. (growth of 49% YOY)
- Operating EBITDA margin, excluding other incomes for three quarters – 14.2 %
- PAT margin 10.1 %
For Q3 FY25
- Total revenue – INR 6612 million (growth of 30% YOY)
- Operational EBITDA INR 940 million (margin 14.2%)
- PAT -INR 665 million (margin 10.1%)
The company expects to pickup the revenue growth rates at 55% YOY basis.
Order book
The company’s order book increased from INR 54228 million in Q2FY 25 to INR 60471 million at the end of Q3FY25.
Several large orders were received from industrial, EV, aerospace, medical and automotive sectors.
The management is optimistic for Q4. According to management all new initiatives are on track and speed of implementation is gearing up with revenue start target for both OSAT and HDI PC boards.
New manufacturing facility
The company has acquired land and started construction activities of the OSAT factory at Sanand in Gujarat and of the HDI PCB factory at Oragadam In Tamilnadu.
Acquisitions
Integration of Iskraemeco India into the company is proceeding smoothly. . The smart meter factory at Hyderabad is in series production and several lakhs of meters have been supplied and robust orderbook makes it mandatory to increase capacities.
The company also acquired majority stake in an AI based railway network safety solution company, called Sensonic, which operates globally.
Capex
So as far as the EMS business is concerned, management think it’s a kind of self-funded now, and they expect at least capex anywhere between the range of INR200 crores, INR300 crores per annum coming in because that has to help in terms of doing the additional volumes that they expect in the FY ’26 and ’27, etcetera.
As far as the capex for semicon is concerned, the total capex is about INR3,300 crores, out of which 70%, 75% comes from central and state government, remaining is company’s equity, and so that’s semicon. And then that will probably get consumed by FY ’28-’29 time frame.
And similarly, for HDI PC board, they have a capex of about INR1,400 crores. And this also will consume fully by about FY ’28-’29. And here also close to about 50%, 60% is the state and central government’s share in terms of capital subsidy.
So over the next — almost INR4,800 crores of capex is likely to be coming up till about FY ’28- ’29, starting from this year, in the newer projects, which is the semicon assembly as well as PC board. But the bulk of it is — in terms of 60% to 70% is — 60% to 75% is about government subsidy. So the cash outflow from the company will be much lower.
The companies Goal
Company is moving towards cherished goal of growing its revenues at a high CAGR, thereby becoming a large, fully integrated ESDM company. The company is working on strategies to operationalize additional beachheads in terms of geographical presence, ODM capability and deepening of its technology footprints. These are critical initiatives that will take it from millions of U.S. dollar revenues to billions of U.S. dollar profitability in the future.
Question and answer session highlights
What makes you confident that net margins and operating margins will improve, given rising expenses due to new contracts, talent acquisition, and interest costs?
the margins have 2 drivers. One driver is, the gross margins, which is depending on blend of business. The order inflow has been in the areas like industrial, aerospace, IT, medical, etcetera. So those are high-yielding areas. So that pushes up the gross margins better than what has happened in the past.
The other source of margins is also the operating leverage, which has actually deleveraged in the last quarter, but the company has added newer teams. The company is adding newer teams into its fold, mainly it had an acquisition in the U.S., we had some acquisitions in India and so on and so forth.
So management is confident that its EBITDA margins will definitely be better than what we had projected. And for the year, they are confident of exceeding 15% EBITDA based on these 2 trends.
some highlights on what are the bifurcations in terms of order book
order books have significantly come in the area of aerospace and defense, then smart meters, then automotive, especially exports and the medical and then IT. And these are large orders, each order is in excess of — each of them is in excess of INR300 crores to INR500 crores execution.
the Rail segment, where we see this decline both 9 months and also for the quarter. So if you could just help us understand what’s the reason behind that?
Rail sector slowdown was due to project delays during the election period. However, order inflow has now increased, and execution will improve in the next two quarters.
there were some delays on shipments of smart meters. So if you could just help us understand, is that a one-off or what’s really happening there? And how are we seeing Q4?
The managements says they are new company and they have just started the manufacturing. There are some delays in the factory doing productions. These are all one-off cases. The management will better answer the question in next two quarters.
apart from automotive and industrial, how are we looking at the other segment scale up in terms of medical, IoT? How are they scaling up?
Company is happy to say that in medical, they have acquired a large client and they are having successive RFQs coming in. And so this is a European-based company, which has acquired some companies in the U.S. too. And so these are large businesses.
Company was lacking this large client deal in medical, which has been fulfilled. On the IoT and IT front, the business is coming as we expected. One of the largest government customers is with the company, and company is likely to see some good expansion in this business in the coming year too.
basically on this guidance cut also for this year, is it more of pushback to next year because you said that you’re going to catch up the lost cut of revenues in the current quarter in a couple of — in the coming quarters. So some sense there, the reason for the cut and how should we think about next year?
So this guidance cut is more like time frame is not available. first 2 quarters, company probably should have done a little more in — in a regular year, it should have done more in the railways and all those sectors, which obviously due to elections, etcetera, got tad delayed.
And as now move — company have completed 3 quarters and pretty much very near the year-end, January is almost complete now.
So company find that physical time availability for the execution of all those orders, it will be putting too much pressure into the system, trying to maintain the original number.
So the order still remain on its book. If you see the order increase is there every month, INR415 crores, INR420 crores per month of order inflow compared to INR360-odd crores last quarter, which is a significant increase. So these will get executed. So company continue to execute this quarter, that is last quarter of this year and next quarter, too.
on the smart meter side. We have seen a couple of new states also sort of giving orders, I think Bihar and Rajasthan. So if you can just guide us about order book in smart meters, how much are we planning to execute over the next 1 year?
company started with mainly PGCIL-based orders. And now 3 more states’ orders have been added and also some AMISPs orders also have been added.
So these have been — so let’s say, 4 new set of large orders have been added post acquisition of Iskraemeco. And company can definitely, on next running 12-month period, do almost INR1,000 crores kind of number in the smart meters alone, that’s a clear possibility.