Kaynes Tech shares drop 17% after FY25 revenue growth guidance cut

Shares of Kaynes Technology India took a significant hit on January 28, falling by 17%. This drop came after the company lowered its revenue growth forecast for FY25, despite reporting strong earnings for the third quarter (Q3).

The management revised its FY25 revenue target to Rs 2,800 crore, down from the previous Rs 3,000 crore. The revision was caused by delays in fulfilling certain orders in the industrial sector worth Rs 100 crore during the December quarter. These orders are now expected to be completed in the March quarter.

By 09:35 am on January 28, Kaynes Tech shares were priced at Rs 4,366.95 on the NSE.

Even though the revenue forecast was lowered, Jairam Sampath, CFO of Kaynes Technology, told CNBC-TV18 that the company still aims for an EBITDA (earnings before interest, taxes, depreciation, and amortization) margin of over 15% for FY25. He also projected the company’s revenue to reach Rs 4,500 crore in FY26.

Kaynes Tech reported a strong 47% increase in its net profit for the December quarter, reaching Rs 66.4 crore, up from Rs 45.1 crore in the same period last year. However, much of this profit boost came from an increase in other income, not from core operations.

Revenue for the quarter grew by nearly 30%, reaching Rs 661.1 crore, compared to Rs 509.2 crore in the previous year. However, the revenue still fell short of what analysts had expected. The company's operational performance also improved, with the EBITDA margin rising to 14.2% from 13.7% in Q3 of the previous fiscal year.

In addition, Sampath mentioned that the company secured new orders in various sectors such as aerospace, defense, and industrials during Q3.

Earlier in January, the company’s board approved a plan to raise Rs 1,600 crore through a Qualified Institutional Placement (QIP). Sampath explained that the funds raised from this QIP will be used to acquire a US-based company.

In summary, despite strong earnings in Q3, the downward revision of Kaynes Tech’s revenue forecast for FY25 caused a sharp decline in its share price. However, the company remains optimistic about its long-term growth and plans for the future.

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