Kaynes Technology India Ltd, one of India’s most closely watched semiconductor and electronics manufacturing stocks, is at the centre of a rare clash between major global brokerages and a rising storm over accounting and cash-flow quality.
On Friday, 5 December 2025, Kaynes Tech shares fell as much as 8% intraday to around ₹4,665, extending a two‑day slide of nearly 17% after Kotak Institutional Equities released a forensic-style note flagging serious issues in the company’s FY25 annual report and related-party disclosures. [1]
Even as the stock tumbles, views on the mid-cap EMS and semiconductor play are sharply divided:
- Kotak has a ‘Reduce’ call and has publicly questioned the company’s accounting and cash-flow reporting. [2]
- JPMorgan today reiterated its ‘Overweight’ rating and a ₹7,550 target price, but told clients not to “bottom fish” at current levels. [3]
- Jefferies, in a note published on 4 December, has a Buy rating with a ₹7,780 target, implying up to 45% upside from recent levels, citing a powerful growth runway in OSAT and PCB businesses. [4]
Here’s a detailed look at what changed on 5 December 2025, what each brokerage is saying, and what’s really at stake for investors tracking Kaynes Tech.
From multibagger to meltdown: How far has Kaynes Tech fallen?
Kaynes Technology was a star of the mid-cap rally. According to data cited by The Economic Times, the stock rallied about 950% from its November 2022 listing to a peak of ₹7,822 in January 2025. Since that high, shares have slipped close to 39%, trading around ₹4,970–₹5,000 on Thursday before Friday’s deeper slide. [5]
Fresh pressure started building over the last month:
- On 4 December, NDTV Profit reported that Kaynes Tech share price had fallen 22.7% over one month, and more than 7% just in the last five days, closing around ₹5,065. [6]
- Kotak’s scathing report, released the same day, triggered another leg of selling, with the stock falling roughly 6% on Thursday. [7]
- On Friday, 5 December, the stock dropped another ~8% intraday to ₹4,665, taking the two‑day decline close to 17%. [8]
For a company priced for aggressive growth in the semiconductor and electronics manufacturing (ESDM) space, the sudden rerating shows how quickly sentiment can flip when corporate governance questions surface.
What exactly did Kotak flag in Kaynes Tech’s numbers?
The latest market turmoil traces back to Kotak Institutional Equities’ deep dive into Kaynes Tech’s FY25 annual report and the financials of its smart metering acquisition, Iskraemeco.
NDTV Profit and Economic Times, summarising Kotak’s note, highlight several red flags: [9]
- Mismatched related-party transactions
- Iskraemeco’s statements show:
- Purchases of about ₹180 crore (₹1.8 billion) from Kaynes Electronics Manufacturing in FY25.
- Year‑end payables of ₹320 crore (₹3.2 billion) to Kaynes Technology and ₹180 crore to Kaynes Electronics Manufacturing.
- Receivables of about ₹190 crore (₹1.9 billion) from Kaynes Technology. [10]
- Kotak notes that these material transactions do not appear in the related‑party disclosures of Kaynes Technology or Kaynes Electronics Manufacturing, raising questions on inter‑company reconciliation and disclosure quality.
- Iskraemeco’s statements show:
- Question marks over the Iskraemeco acquisition
- Kaynes acquired Iskraemeco and Sensonic for around ₹8.3 crore, but Kotak points to what it calls “ambiguous accounting treatment” of the deal.
- Instead of a straightforward recognition of the purchase price, the consolidated balance sheet shows complex goodwill and reserve adjustments. [11]
- Cash-flow strain and capitalisation of ‘technical know‑how’
- Kotak says cash flow from operations turned negative, driven by a 22‑day increase in the cash conversion cycle and heavy capex. [12]
- The brokerage highlights that Kaynes capitalised around ₹180 crore, or 6.5% of revenue, under “technical know-how”—without detailed disclosures on what those know‑how assets are. [13]
- High contingent liabilities and expensive debt
- Business Upturn, summarising Kotak’s analysis, points out that contingent liabilities have climbed to about ₹520 crore, roughly 18% of net worth, mainly due to performance and corporate guarantees to subsidiaries. [14]
- The same report notes that Kaynes’ average borrowing cost was around 17.7% in FY25, suggesting elevated interest burden and cash‑flow pressure. [15]
Kotak has therefore maintained a ‘Reduce’ rating, arguing that the balance of risks—from aggressive capex and pending government grants to governance worries—does not justify chasing the stock despite its recent underperformance. [16]
Kaynes Tech issues a clarification – but the market isn’t convinced
In response to the uproar, Kaynes Technology filed a clarification with stock exchanges on 5 December 2025, addressing Kotak’s observations. The filing is referenced on BSE and NSE, and a summary of the company’s stance has been reported by several outlets. [17]
According to Business Upturn’s coverage of the company’s response: [18]
- Six key areas were addressed: goodwill recognition, accounting for intangibles under Ind AS 103, borrowing costs, contingent liabilities, and related‑party disclosures across the Kaynes group.
- The company explains that:
- Customer contracts and other assets at Iskraemeco have been recognised as intangible assets and are being amortised over their useful lives.
- The rise in contingent liabilities is linked mainly to performance guarantees and corporate guarantees offered to subsidiaries, not to unexpected off‑balance sheet risks.
- Management insists that financial reporting follows Indian Accounting Standards (Ind AS), and that corrective steps have been taken where gaps in disclosures were found.
Despite this clarification, Friday’s trading action shows that investors remain sceptical. Business Upturn notes that shares still crashed about 8% intraday on 5 December, even after the clarification, suggesting the market wants clearer reconciliation of inter‑company balances and stronger evidence of improved governance. [19]
JPMorgan: Still ‘Overweight’ but tells investors not to bottom-fish
Amid the sell‑off, JPMorgan’s latest note—covered this morning—has become the focal point for institutional investors. [20]
Key takeaways from JPMorgan’s stance:
- The brokerage retains an ‘Overweight’ rating on Kaynes Tech with a target price of ₹7,550, implying substantial upside from current levels.
- However, it explicitly advises against “bottom fishing” in the stock at this stage, even after the steep two‑day correction.
- JPMorgan argues that:
- The near‑term trajectory of the stock is now driven more by the balance sheet and cash‑flow clarity than by the headline order book or growth narrative.
- There is no “clear, strong catalyst” expected before Q3 FY26 earnings, especially given the negative sentiment triggered by Kotak’s report.
- “Balance sheet and cash flows performance will determine the fortune of the stock,” the note emphasises—underscoring that execution and transparency now matter more than growth promises. [21]
In other words, JPMorgan is saying: the long‑term story may still be intact, but this isn’t the moment to rush in just because the stock looks cheaper.
Jefferies calls Kaynes a semiconductor stock to buy with 45% upside
In sharp contrast to Kotak’s scepticism and JPMorgan’s caution on timing, Jefferies remains firmly in the bull camp.
A Trade Brains article dated 4 December 2025 highlights Jefferies’ views on Kaynes Technology as a “semiconductor stock to buy now” with up to 45% upside. [22]
Jefferies’ thesis hinges on three pillars:
- Explosive growth in OSAT and advanced manufacturing
- Jefferies expects sales and EPS to grow at a 51% CAGR between FY25 and FY28.
- Kaynes has already shipped a pilot OSAT order of 900 chips and plans to scale up to 1.5 million chips per day by Q1 FY27, suggesting a steep ramp‑up in capacity. [23]
- The company has secured approvals for high‑density interconnect (HDI) PCBs, multi‑layer boards, camera modules and laminates, strengthening its position in complex, high‑value electronics manufacturing.
- Robust order book and long-term guidance
- The order book has jumped from ₹5,422 crore in Q2 FY25 to ₹8,099 crore in Q2 FY26, a near 49% year‑on‑year increase, signalling strong demand visibility. [24]
- Kaynes is targeting $2 billion in revenue by FY30, with about ₹4,500 crore coming from OSAT and ₹2,500 crore from PCB, backed by a total OSAT capex plan of ₹3,400 crore, roughly 70% funded through government subsidies. [25]
- Solid (but stretched) financial metrics
- For the latest reported quarter, revenue rose from ₹572 crore to ₹906 crore, while net profit doubled from ₹60 crore to ₹121 crore, reflecting strong operating leverage. [26]
- Return ratios remain modest but improving, with ROCE around 14.3% and ROE about 10.7%, and a low debt‑equity ratio of 0.19. [27]
- Jefferies does acknowledge that working capital will stay elevated—around 115 days or about 35–40% of estimated FY26 sales—but sees this as manageable in light of the growth trajectory. [28]
With a ₹7,780 target price, Jefferies’ upside case is actually more bullish than JPMorgan’s, and roughly in line with Nomura’s ₹8,478 target referenced in earlier reports. [29]
Nomura, JM Financial and others: A sharply split street
Kaynes Tech has become a litmus test for how much governance risk growth investors are willing to tolerate.
Recent brokerage positioning (from late November to early December) shows a highly polarised street: [30]
- Nomura:
- Maintains ‘Buy’ with a ₹8,478 target, implying ~46–47% upside from late‑November levels.
- Stays optimistic on growth despite a 24–25% correction from the October high.
- JM Financial:
- Upgraded Kaynes to ‘Buy’ with a ₹7,000 target, arguing that the recent share price fall improves the risk‑reward, even after trimming EPS estimates due to higher depreciation.
- Kotak:
- Holds a ‘Reduce’ rating and a target around ₹6,180, pointing to accounting complexity, negative free cash flows, and pending government grants for OSAT and PCB capex.
- Consensus (as per Investing.com data):
- Across 21 analysts, Kaynes Tech has an overall “Buy” consensus, with 11 Buy, 7 Hold and 3 Sell ratings.
- The average 12‑month target is about ₹6,953, with a high of ₹8,478 and a low of ₹5,703, implying an average upside close to 49% from recent prices. [31]
The message is clear: fundamentally, the growth story is still widely believed—but the range of opinions on governance and balance‑sheet risk is unusually wide for a stock priced at high multiples.
What all this means for investors watching Kaynes Tech
For investors tracking Kaynes Tech—whether or not they hold the stock—the developments of 4–5 December 2025 change the nature of the conversation in three key ways.
1. The story has shifted from “how fast can it grow?” to “how clean is the growth?”
Until now, most debates around Kaynes were about valuation, capex intensity, and execution risk on OSAT and PCB. The Kotak note has moved the spotlight squarely onto:
- Quality of disclosures,
- Inter‑company accounting discipline, and
- Reliability of cash‑flow reporting. [32]
For high‑growth, high‑multiple names, governance scares often command a valuation de‑rating that can persist well beyond the initial sell‑off unless management over‑delivers on transparency.
2. Brokerages agree on one thing: balance sheet and cash flow now matter more than order book
Jefferies, Nomura and others see massive growth potential, backed by a swelling order book and large OSAT/PCB capacity additions. [33]
JPMorgan, even while staying Overweight, explicitly states that “balance sheet and cash flows performance will determine the fortune of the stock”, and advises against bottom‑fishing amid sentiment damage and lack of near‑term catalysts. [34]
In practice, that means future quarterly updates will likely be judged less on headline revenue growth and more on:
- Working‑capital discipline and reduction in the cash conversion cycle,
- Clarity and reconciliation of related‑party balances,
- Movement in contingent liabilities, and
- Normalisation of funding costs.
3. The company has started responding—but must now build back trust, quarter after quarter
Kaynes’ clarification filing is a necessary first step, clarifying its stance on goodwill, intangibles, contingent liabilities, and disclosures. [35]
However, Friday’s continued sell‑off shows that one filing and a press note will not be enough. Investors will look for:
- Auditor comfort and clean opinions in upcoming financials,
- More granular related‑party disclosure tables that clearly tie together numbers across Kaynes Tech, Kaynes Electronics Manufacturing and Iskraemeco,
- Evidence that overdue receivables (like the ₹458 million pending for over a year) are either collected or adequately provided for. [36]
Key things to watch after 5 December 2025
For readers following Kaynes Technology over the coming months, some pivotal checkpoints will be:
- Q3 FY26 results and commentary
How much detail management provides on working capital, related‑party reconciliation, and grant inflows for OSAT/PCB projects will be critical. - Updates on OSAT ramp‑up
Progress towards the 1.5 million chips/day target and utilisation of OSAT capex will indicate whether the growth engine is on track. [37] - Regulatory or auditor scrutiny
Any follow‑up queries from stock exchanges or SEBI, or enhanced disclosures from auditors, could either deepen concerns or help clear the overhang. - Brokerage stance changes
If more houses follow Kotak’s cautious line, the valuation reset could deepen; if, instead, leading houses like Jefferies, Nomura, or JPMorgan upgrade or reaffirm post-clarification, it may stabilise sentiment.
Final word
As of 5 December 2025, Kaynes Tech has moved from being a clean‑cut “semiconductor growth story” to a high‑growth, high‑scrutiny stock where:
- Upside narratives (Jefferies’ 45% potential, Nomura’s 46–47% upside) are very much alive, [38]
- But governance and cash‑flow concerns (highlighted by Kotak and echoed in market price action) loom large. [39]
References
1. www.businessupturn.com, 2. www.ndtvprofit.com, 3. www.ndtvprofit.com, 4. tradebrains.in, 5. m.economictimes.com, 6. www.ndtvprofit.com, 7. www.ndtvprofit.com, 8. www.businessupturn.com, 9. www.ndtvprofit.com, 10. m.economictimes.com, 11. www.ndtvprofit.com, 12. www.ndtvprofit.com, 13. www.ndtvprofit.com, 14. www.businessupturn.com, 15. www.businessupturn.com, 16. www.ndtvprofit.com, 17. money.rediff.com, 18. www.businessupturn.com, 19. www.businessupturn.com, 20. www.ndtvprofit.com, 21. www.ndtvprofit.com, 22. tradebrains.in, 23. tradebrains.in, 24. tradebrains.in, 25. tradebrains.in, 26. tradebrains.in, 27. tradebrains.in, 28. tradebrains.in, 29. m.economictimes.com, 30. www.businesstoday.in, 31. www.investing.com, 32. www.ndtvprofit.com, 33. tradebrains.in, 34. www.ndtvprofit.com, 35. nsearchives.nseindia.com, 36. www.businessupturn.com, 37. tradebrains.in, 38. tradebrains.in, 39. www.ndtvprofit.com
