Kaynes Technology Q1 FY27: Strong Growth, Weaker Profitability, and a Tight Timeline for OSAT and PCBs

Kaynes Technology India Limited reported a sharp expansion in scale in Q1 FY27, but the quarter also highlighted the trade-offs of rapid capacity build-out and a tougher supply chain environment. Consolidated revenue from operations rose to INR 946 crore, up 40% year on year from INR 673.5 crore. EBITDA increased to INR 147.6 crore, but EBITDA margin softened to 15.6% from 16.8%.

Profitability at the net level took a bigger hit. Net profit after tax fell to INR 56.4 crore from INR 74.6 crore, and net profit margin compressed to 6.0% from 11.1%. The investor presentation and management commentary pointed to higher depreciation following recent investments, lower other income compared to prior periods, and a cost environment shaped by forex movement, energy costs, and component inflation.

Q1 FY27 in numbers: growth delivered, margins under pressure

The quarter’s revenue growth was supported by the core EMS business. Management stated that growth in the smart metering business was flat to negative in the quarter, and that the company consciously reduced supplies to protect the balance sheet. This shift was a response to collections lagging billing in metering projects.

Order book remained healthy, rising to INR 8,903.8 crore in Q1 FY27 versus INR 7,401.1 crore in Q1 FY26, as per the investor deck.

Working capital and metering: management prioritises collections over growth

Working capital continued to be a key discussion item. In the investor presentation, net working capital days on a rolling 12-month basis increased to 163 in Q1 FY27 from 122 in Q1 FY26. Asset turnover and ROCE (rolling, adjusted for unutilized IPO and QIP proceeds) also declined.

On the earnings call, management gave more context. They said the EMS business generated strong collections, but the smart metering business (referred to as GridCrest) had a mismatch between sales and collections during the quarter. Management stated that metering sales were about INR 240 crore, while collections were INR 88 crore, which led to the decision to stop supplies until collections improved. They also said that around INR 200 crore was received in the first week of July, and reiterated confidence in turning the metering business cash positive by the end of the financial year.

Inventory was also described as a deliberate decision. Management said it had increased inventory to manage longer lead times and volatility, and that this helped support growth. In the call, they spoke about the supply chain tightening across components and the need to secure materials early, even if it temporarily increased working capital.

OSAT and PCB: Q3 FY27 is the credibility checkpoint

Kaynes continues to position itself as moving from contract manufacturing toward product and platform leadership. The two strategic growth engines highlighted were Kaynes Semicon (OSAT) and Kaynes Circuit (bare PCB manufacturing).

Management acknowledged that the West Asia conflict created disruptions in equipment imports and component logistics, resulting in minor timing slippage. However, they reiterated that Kaynes Semicon Unit 2 and Kaynes Circuit Chennai remain on track to be operational by Q3 FY27.

The company provided several verifiable data points on this ramp-up:

• FY26 capex: INR 473 crore for OSAT and INR 324 crore for PCB, as stated on the call.
• Cumulative investment: management stated OSAT and PCB together are around INR 1,200 to 1,250 crore, with about INR 250 crore of items in transit.
• Government support: management stated subsidy receipts for OSAT of INR 170 crore till July 2026.
• FY27 revenue target: management stated a combined revenue target of INR 450 to 500 crore from OSAT and PCB for FY27, with commercial revenue expected from Q3 and Q4.
• FY27 capex guidance: about INR 300 crore for OSAT, INR 300 crore for PCB, and INR 250 crore for EMS.

On the PCB business, management pointed to strong market tightness and said PCB prices had risen materially. They also indicated that trials were ongoing with a large global customer, and that a vendor code had been issued.

Macro and supply chain: higher costs and longer lead times

The investor presentation built a clear narrative around global uncertainty and longer lead times. It flagged supplier allocation, AI and data-centre demand crowding out capacity, higher energy costs, and freight chokepoint risks. It also listed extended lead times across MCUs and power devices, MLCCs, diodes and MOSFETs, and connectors.

Management echoed this on the call, stating the component environment has turned challenging again, similar to earlier shortage periods. They said pricing pass-through is present but may come with a timing lag because adjustments are typically made quarter on quarter. They also cautioned that FY27 will be a difficult year, reflecting uncertainty on availability and costs.

Takeaways

Kaynes delivered strong top-line growth in Q1 FY27, supported by the core EMS business and a healthy order book. But the quarter also highlighted the cost and cash consequences of scaling in a volatile supply chain cycle. Profitability fell sharply at the PAT level, while working capital days remained elevated.

The next major milestone is Q3 FY27. Management has reiterated that OSAT and PCB facilities should be operational by then and that commercial revenue should begin in Q3 and Q4. If execution matches those timelines, it would validate the company’s multi-year capex strategy. If ramp-up is delayed, the combination of higher depreciation, tight components, and working capital demands could remain a near-term drag on reported profitability.