Electronics System Design & Manufacturing (ESDM) giant Kaynes Technology has seen its shares correct nearly 48% this year. International brokerage house JP Morgan has reiterated an Overweight rating and a Rs 7,550 target price, signalling about 91% potential upside from current levels.
Here is a detailed analysis of JP Morgan’s investment rationale for Kaynes Tech
#1: JP Morgan on Kaynes Technology: Valuation call holds despite steep correction
JP Morgan said the recent derating appears tied to short-term liquidity strain rather than any weakening in the company’s fundamentals. Kaynes’ core EMS business continues to expand, and the brokerage valued it at Rs 5,200 per share, with additional value coming from its OSAT and PCB segments. It added that the share price now trades well below its long-term valuation range, creating room for recovery if cash cycles stabilise. The firm believes the company’s growth strategy remains on course and that the current volatility reflects timing issues rather than structural problems.
#2: JP Morgan on Kaynes Technology: Data shows the strain from smart-meter receivables
Receivables climbed to around Rs 1,360 crore in the first half of FY26, a large portion of which came from smart-meter clients. About Rs 240 crore of these dues were pending for more than a year, placing pressure on working capital and forcing the company to fund operations for longer periods before cash came in. This pushed working-capital days to 116, compared with 87 last year. For a business investing heavily in new capacity, such delays restrict financial flexibility and slow the pace at which new facilities can scale, it further added.
#3: JP Morgan on Kaynes Technology: Smart-meter mix skewed short-term performance
A surge in smart-meter deliveries earlier in the year increased the segment’s share within the revenue mix. While it added to top-line growth, the longer payment timelines associated with these customers weighed on cash flow. JP Morgan expects the mix to normalise in the second half as other verticals regain share. The brokerage also noted that agreements signed recently include better payment structures, which should reduce the risk of similar buildups in future periods.
#4: JP Morgan on Kaynes Technology: Collection improvement is the first signal to watch
The brokerage believes the most immediate indicator of recovery will be progress in collecting dues tied to older smart-meter contracts. Management has set a timeline to resolve the Rs 240 crore backlog by March 2026. Any movement in this direction would relieve pressure on working capital and indicate that the worst of the receivable cycle has passed. JP Morgan said investors tend to respond quickly when companies demonstrate that liquidity issues are easing, even if earnings have not fully recovered.
#5: JP Morgan on Kaynes Technology: Smart-meter exposure set to ease in the second half
JP Morgan added that the company is likely to benefit as its revenue mix becomes more balanced. With smart-meter shipments expected to taper in the coming quarters, the share of business from customers who typically follow faster payment cycles should rise. This shift would help working-capital days move back toward historical levels. The brokerage considers this rebalancing important because it allows the company to operate with greater financial headroom while continuing its expansion.
#6: JP Morgan on Kaynes Technology: OSAT and PCB expansion could strengthen earnings
The OSAT and PCB verticals, though still in early stages, are entering a phase where they can begin contributing more meaningfully. These facilities usually require long ramp-up periods, but once utilisation rises, they can improve margins and provide more stable earnings. JP Morgan said early traction from these units could help investors look beyond near-term cash constraints. Consistency in output, even at moderate levels, would indicate that the company’s capital investments are beginning to pay off.
OSAT is the stage where semiconductor chips are packaged and tested before they can be used in any device, making it one of the most critical steps in the chip supply chain. PCB manufacturing, meanwhile, involves producing the circuit boards that hold and connect electronic components inside everything from industrial machines to consumer electronics.
#7: JP Morgan on Kaynes Technology: Financial outlook and the valuation gap
The brokerage forecasts revenue growth of about 46% annually between FY25 and FY28 and expects margins to improve as new capacity stabilises. However, its valuation assumes that working-capital days move closer to 75. If the company can bring working-capital days down to roughly 75, it would mark a shift back to a healthier cash cycle and remove one of the biggest overhangs on the stock. If receivables remain as stretched as they are now, the brokerage’s downside estimate stands at around Rs 4,900. This gap between scenarios shows how closely the stock’s trajectory depends on cash conversion rather than demand trends.
JP Morgan on Kaynes Technology: Risks to watch
JP Morgan said the company’s long-term story remains intact despite a challenging year. The coming quarters will reveal whether Kaynes can bring receivables under control and demonstrate consistent progress in its new facilities. The brokerage believes the gap between the company’s current market price and its valuation could narrow. For now, cash flow remains the central metric to watch as the company works through this phase.