Kaynes Technology Share Price Slides 43% From October Peak as Kotak Flags Accounting Issues; Management Defends FY25 Numbers on December 8 Call

Mumbai, December 8, 2025 — Electronics manufacturing services (EMS) player Kaynes Technology India Ltd is in the eye of a governance storm after a hard-hitting report from Kotak Institutional Equities triggered a sharp sell-off, a flurry of clarifications from management, and an emergency analyst call on Monday morning.

The stock, once a market darling, has now fallen about 43.5% from its October 7 peak, with Friday’s 12%-plus single-day slide marking its steepest recent decline. ^[1] As of the latest available intraday data on December 8, Kaynes shares were trading in a broad range of roughly ₹4,270–₹4,530 after opening around ₹4,410, according to price data compiled by Investing.com. ^[2]

At the same time, the stock has landed in the F&O ban list for Monday’s session, restricting fresh derivative positions as market-wide position limits were breached. ^[3]

From multibagger to F&O ban: how the sell-off escalated

Kaynes Technology listed in November 2022 and rallied about 950% to a high of around ₹7,822 by January 2025, making it one of the standout performers of the recent mid-cap bull run. ^[4]

Momentum turned abruptly after Kotak Institutional Equities released a note on December 3, 2025, flagging what it described as inconsistencies and ambiguities in the company’s FY25 annual report and related-party disclosures.

Key milestones in the recent slide:

October 7, 2025: Kaynes hits a three‑month high near ₹7,705. ^[5]
December 4: Shares fall over 6% after Kotak’s report first hits the market. ^[6]
December 5: The stock plunges 12–13% in intraday trade to an eight‑month low around ₹4,343, with heavy volumes; it ends the day close to ₹4,354, down roughly 31% over a month even as the Sensex gained about 2.3%. ^[7]
By this point, Kaynes is down over 40% from its recent highs and nearly 43.5% from the October peak, according to an Economic Times technical analysis. ^[8]

On Monday, both Business Standard and ETMarkets flagged that Kaynes had entered the F&O ban list alongside names like Sammaan Capital and Bandhan Bank, meaning derivatives traders cannot build new positions until open interest falls below the regulatory threshold. ^[9]

What Kotak’s report alleged

Kotak’s note questioned several aspects of Kaynes’ FY25 financials and disclosures, particularly around its acquisition of Iskraemeco (a smart metering business) and Sensonic, and the way intra‑group transactions were reported. ^[10]

According to details reported by The Economic Times and Business Standard, the brokerage highlighted four big areas of concern: ^[11]

Related-party mismatches across entities
- Iskraemeco’s related‑party disclosures show:
  - Purchases of ₹180 crore from Kaynes Electronics Manufacturing in FY25
  - Year‑end payables of ₹320 crore to Kaynes Technology and ₹180 crore to Kaynes Electronics Manufacturing
  - Receivables of ₹190 crore from Kaynes Technology
- Kotak noted that these flows and balances do not appear in the standalone related‑party disclosure notes of Kaynes Technology or Kaynes Electronics Manufacturing. ^[12]
Goodwill and intangible accounting for acquisitions
- Kaynes acquired Iskraemeco and Sensonic for about ₹88.3 crore, recognizing goodwill of ₹114 crore.
- Yet the consolidated balance sheet shows a small net negative adjustment to goodwill, along with a sharp rise in general reserves, and no explicit fair‑value adjustment line for contract‑related intangibles. ^[13]
Surge in contingent liabilities
- Contingent liabilities nearly doubled from ₹270 crore (11% of net worth) in FY24 to about ₹520 crore (18% of net worth) in FY25, largely due to bank guarantees, corporate guarantees and receivables discounting arrangements. ^[14]
Working capital stress and cash‑flow complexity
- Kotak pointed to a 22‑day increase in the cash conversion cycle, negative free cash flow in FY25, and what it described as complex distinctions between “cash capex” and “asset additions” in the accounts. ^[15]

Kotak’s language around “ambiguous accounting treatment” and “inconsistent” disclosures triggered immediate concerns among investors about transparency and governance, leading to back‑to‑back price shocks in the stock. ^[16]

Kaynes Technology’s written clarification: accounting breakdown

In response, Kaynes filed a detailed clarification with the stock exchanges, which has since been summarised by multiple outlets including ScanX and Business Today. ^[17]

The company’s key messages:

1. Goodwill vs intangible assets (Iskraemeco acquisition)

Management said that under Ind AS 103 (Business Combinations), previously unrecognised customer contracts can be recognised as intangibles when an acquisition is completed.
For Iskraemeco, a “major part” of the consideration was said to relate to a large customer contract, so this was capitalised as an intangible asset and amortised over the contract term, with a corresponding reduction of goodwill. ^[18]

In other words, Kaynes argues that the unusual movement in goodwill and reserves reflects reclassification into contract‑related intangibles, rather than missing assets.

2. Contingent liabilities of ₹520 crore

The company confirmed the sharp increase in contingent liabilities and broke down the key additions: ^[19]

₹96.8 crore – performance bank guarantees for Iskraemeco projects
₹132.5 crore – corporate guarantees to subsidiaries
- ₹122.5 crore for Kaynes Electronics
- ₹70 crore for Iskraemeco

Management said these guarantees were necessitated by funding needs at Iskraemeco after acquisition and are standard support arrangements rather than new operational risks.

3. Admitted non‑disclosure of some related‑party transactions

Perhaps the most sensitive part of the clarification: Kaynes acknowledged that certain related‑party transactions and year‑end balances were omitted from standalone financial statement notes. ^[20]

Specifically, the company confirmed that:

FY25 standalone disclosures did not include:
- Purchases of about ₹180 crore from Kaynes Electronics Manufacturing
- Year‑end payables of ₹320 crore to Kaynes Technology and ₹180 crore to Kaynes Electronics Manufacturing
- Receivables of ₹190 crore from Kaynes Technology
These items were eliminated in the consolidated financial statements as intra‑group transactions, in line with Ind AS, but should also have appeared in the standalone related‑party note.
Kaynes says the omission was “inadvertent” / clerical, has now been corrected in subsequent filings, and has “been noted for future compliance.” ^[21]

The New Indian Express separately reported that management admitted to these lapses even while insisting that there was no broader wrongdoing. ^[22]

4. Borrowing costs: 17.7% vs 10%

Kotak had calculated Kaynes’ average borrowing cost for FY25 at 17.7%, which looks high in a falling rate environment.

Kaynes countered that if bill discounting facilities are included in the denominator, the effective cost drops to about 10%, and that by the same method FY24 borrowing costs would have been over 25%, implying improvement rather than deterioration. ^[23]

5. ₹180 crore capitalised in “technical know‑how”

The company also gave a granular split of the ₹180 crore of intangibles capitalised under “technical know‑how” in FY25: ^[24]

₹115 crore – large customer contracts (linked to the Iskraemeco deal)
₹26 crore – development costs related to the acquisition
₹39 crore – intangibles created via in‑house R&D

Kaynes emphasised that these treatments comply with Ind AS and that goodwill and other intangibles are tested annually for impairment.

Monday’s analyst call: “nothing ambiguous”, but communication lapses

The written clarification did little to stop the slide, prompting Kaynes to schedule an urgent business update conference call on December 8, 2025 at 8:30 a.m. IST, hosted by Axis Capital and attended by the chairperson, vice chairman, managing director and CFO. ^[25]

On that call, as reported by NDTV Profit, management: ^[26]

Reiterated that there is “nothing ambiguous” about the FY25 annual report.
Argued that most of Kotak’s “conclusions or implications” were not valid in their view.
Acknowledged that there were specific shortcomings in disclosures around the Iskraemeco transaction and admitted the company could have handled communication with investors better.
Described the stock’s steep correction as a temporary “passing phase” and insisted that underlying business numbers remain “very promising.”

The messaging underscores a recurring theme: Kaynes is conceding disclosure errors, but firmly denying any deeper accounting or governance problems.

Investors still wary: “Traders ignore clarification”

Despite the detailed rebuttal, market sentiment has remained fragile.

An Economic Times markets report noted that traders “ignored” Kaynes’ clarification, with the stock falling another 6% on December 5, signalling that many investors were unconvinced by the explanations. ^[27]

The New Indian Express also highlighted that while the company admitted to some related‑party non‑disclosures, the stock was still down about 7% on the day, as worries about transparency persisted. ^[28]

On Monday morning, the situation was serious enough that Kaynes appeared on pre‑market “stocks in F&O ban” lists published by both ETMarkets and Business Standard, underscoring the extent of speculative positioning in the stock. ^[29]

Brokerages: from outright ‘Sell’ to cautious optimism

The Street remains divided on what happens next.

Investec: ‘Sell’ on rich valuations and weak core business

A detailed note from Investec (quoted by Business Standard) maintained a ‘Sell’ rating on Kaynes, with a target price of ₹5,760. ^[30]

The brokerage highlighted three major concerns:

Core EMS business lagging – growth is increasingly driven by the acquired Iskraemeco smart metering business rather than the legacy EMS operations.
Deteriorating working capital – trade receivables shot up from ₹570 crore at FY25-end to about ₹1,120 crore by H1FY26, even though revenue run‑rates were broadly stable; the company also created a ₹55 crore provision for doubtful debts, around 10% of the FY25 debtor base.
Balance‑sheet strain vs valuation – Investec values the core business at around 55x FY27 earnings, which it considers “rich” given the emerging balance‑sheet risks. ^[31]

JPMorgan: Overweight, but “avoid bottom fishing”

JPMorgan has taken a nuanced stance.

According to coverage in Moneycontrol and Business Standard, the brokerage: ^[32]

Retained an ‘Overweight’ rating and a target near ₹7,550, implying significant upside from current levels.
Nevertheless urged investors to “avoid bottom fishing” until questions around the balance sheet, cash flows and accounting practices are better resolved.

In other words, JPMorgan still likes the long‑term story, but is wary of near‑term governance overhang.

ICICI Securities: sees errors as likely clerical

ICICI Securities, meanwhile, sounded relatively more sanguine on the accounting side.

The brokerage observed that the missing related‑party disclosures appear to be clerical errors in standalone reporting, given that the transactions were captured and eliminated in the consolidated books. It said this does not in itself prove deeper transparency or fraud issues, though it does reinforce the need for stronger processes. ^[33]

ICICI also noted that management has repeatedly promised to bring down working capital days by FY26, primarily via receivable discounting and tighter collection. ^[34]

Technical and valuation picture: deeply corrected, still expensive

Technically, Kaynes now looks deeply oversold in the short term but still expensive on fundamentals:

The stock is down about 43.5% from its October high, and Friday’s 12.5% fall was its worst daily decline in the recent phase. ^[35]
It is trading nearly 26% below its 200‑day simple moving average, a gap that often precedes mean‑reversion bounces, according to ETMarkets’ expert view with Geojit’s Anand James. ^[36]
At the same time, live data from ICICI Direct shows Kaynes still valued at around 77x trailing earnings and roughly 6.2x book value, even after the steep correction. ^[37]

The ET technical note mapped out a potential tactical upside toward roughly ₹4,541 if a relief rally takes hold, but warned of a downside risk toward the 52‑week low near ₹3,825 if selling pressure persists and key support levels break. ^[38]

What to watch after December 8

After Monday’s analyst call and the F&O ban, the Kaynes saga is far from over. Investors and regulators are likely to focus on a few key areas:

Further disclosures and restatements
- Whether Kaynes issues any additional formal restatements or revised notes beyond the already admitted omissions will be closely watched.
- Any commentary from the auditors or rating agencies could also move sentiment. ^[39]
Regulatory scrutiny
- With contingent liabilities jumping and RPT disclosures found wanting, the stock could attract deeper scrutiny from SEBI or stock exchanges, particularly if more inconsistencies emerge. ^[40]
Working capital and cash flow trends
- Upcoming quarterly results will be critical to see if receivables come under control and operating cash flows turn sustainably positive. ^[41]
Performance of the Iskraemeco smart‑metering business
- Kotak’s report underlines that a large slice of Kaynes’ profit growth in FY25 came from Iskraemeco, with very high reported margins. Any slowdown, re-pricing of contracts, or receivable write‑offs in this segment could materially affect the equity story. ^[42]
Stability of shareholding and derivatives positions
- With Kaynes in the F&O ban list, how quickly positions normalise — and whether long‑term institutional investors step in or pare holdings — will shape near‑term volatility. ^[43]

Bottom line

Kaynes Technology now sits at the uncomfortable intersection of rapid growth, aggressive valuations, and heightened governance scrutiny.

Kotak’s report has forced a public debate on how the company reports acquisitions, intangibles and intra‑group transactions.
Management has mounted a detailed defence, admitting specific disclosure errors while rejecting suggestions of deeper accounting issues.
Brokerages are split: some see a fundamentally attractive business facing a temporary confidence shock, while others warn that rich valuations leave little margin for error if cash‑flow and working‑capital risks materialise. ^[44]

For now, the only certainty is volatility. Until the dust settles around disclosures, cash flows and the performance of the Iskraemeco franchise, Kaynes Technology is likely to remain one of the most closely watched — and hotly debated — mid‑cap names on Dalal Street.

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