Kaynes Tech shares get a downgrade from JPMorgan with price target cut; Key factors to watch

Shares of Kaynes Technology Ltd. will be in focus on Thursday, May 14, in response to its results for the March quarter, which were a miss across parameters, when compared to street expectations.

The stock, which fell over 10% across Monday and Tuesday, recovered some ground on Wednesday, gaining 3%, in response to results by its peer Dixon Technologies, which were better-than-expectations, leading to the stock gaining nearly 10%.

Here are five key reasons why the stock may be under pressure today:

A Miss Across The Board

Kaynes Tech's revenue, Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA), and EBITDA margins were all below a CNBC-TV18 poll of analysts for the March quarter.

The company reported revenue of ₹1,242 crore, lower than the CNBC-TV18 poll of ₹1,508 crore.

Its EBITDA of ₹193 crore, was also below expectations of ₹243 crore. EBITDA margins at 15.5% were below the 16.1% projection, while net profit of ₹91.2 crore was well below the ₹172 crore projection.

Guidance Miss

For the full financial year of 2026, Kaynes Tech reported revenue growth of 33%, contrary to the management's own projections of ending the year with 51% growth.

The management had also guided for margins to be around 17% at the end of the year, those stood at 15.8%.

On the revenue front, Kaynes Tech had told CNBC-TV18 earlier, that the fourth quarter would bring in a topline of ₹1,700 crore, but the actual figure stood at ₹1,242 crore.

Cash Flow Concerns

Kaynes Tech reported a negative operating cash flow of ₹600 crore during the quarter, while the management had expressed confidence of turning cash flow positive at the end of the financial year.

The average cash conversion cycle has also increased to 125 days from 84 days earlier, an increase of 49%.

Receivable days have also increased to 134 from 84 earlier.

Order Book & Debt Reduction

For the financial year-end, Kaynes Tech reported an order book of ₹8,366.3 crore, which is higher than the ₹6,596.9 crore at the end of the previous financial year 2025.

The company's net debt has also reduced to ₹207.4 crore from ₹581.3 crore earlier.

JPMorgan Downgrades

Brokerage firm JPMorgan has downgraded Kaynes Tech to "neutral" from its earlier rating of "overweight" and has cut its price target to ₹4,000 from ₹6,000 earlier.

JPMorgan has cut Kaynes Tech's earnings estimates by 12% to 17% over the next two years, led by cuts across the core EMS business, and the OSAT business as well.

Kaynes Tech's core EMS multiple has been cut to 33 times from 45 times earlier by JPMorgan, due to cut in revenue growth over the next two years and the medium-to-long-term in their DCF model, and an increase in net working capital days over the medium-term.

"While still expecting a strong 40% revenue CAGR and 45% earnings CAGR over financial year 2026-2028, thanks to the ramp-up of the OSAT and PCB business, we believe the stock will remain a "show me" stock, until the gap between actual numbers and the company guidance narrows," JPMorgan wrote in its note.

CLSA Sees Negative Reaction

CLSA sees a negative reaction to the stock after its results and after a further deterioration in its balance sheet, which was a key monitorable.

The brokerage though, has an "outperform" rating with a price target of ₹4,200.

Shares of Kaynes Tech ended 3.3% higher on Wednesday at ₹4,182. The recent recovery has meant that the stock is still positive on a year-to-date basis.