Kaynes Tech Q4 FY25 Earnings Analysis

- EMS business is expected to grow between 40% to 50% on its own, driven by self-generated revenues and ongoing capex (Page 19). - For FY '26, revenue guidance is around INR4,500 crores, excluding future acquisitions (Page 13). - Orders are growing robustly, with order book increasing from INR54,228 million in Q2 FY '25 to INR60,471 million in Q3 FY '25, driven by industrial, EV, aerospace, medical, and automotive sectors (Page 3). - EMS business is supported by export growth expected to reach 20-25% of total business in FY '26 (Page 10). - New capacities in OSAT and HDI PC board projects planned to start significant revenue generation from Q4 of FY '26 (Page 5). - Expansion in EV business across two-, three-, and four-wheelers, including EV infrastructure, is expected as new models launch and segments stabilize (Pages 15-16). - Margins and operating leverage are expected to improve as newer teams and acquired businesses ramp up revenue from Q4 FY '25 and beyond (Page 6).

- The company expects revenue growth to exceed 55% year-on-year for FY '25. - EBITDA margins are targeted to be above 15% for the full FY '25 and around 15%-16% for FY '26. - Operating cash flow is expected to turn positive by Q4 FY '25 with improved working capital management. - The EMS business is projected to grow 40%-50% organically through revenue generation and capex. - The OSAT facility in Sanand is expected to commercialize by H2 FY '26 contributing to higher margins (20%+ in OSAT). - The company aims to expand through inorganic acquisitions in the U.S. with ticket sizes of INR35-50 million. - Longer-term, the target is to reach $1 billion revenue by FY '28 through geographic expansion, ODM capabilities, and technology strengthening. - Margins are expected to improve with operating leverage from new team ramp-up and high-margin sectors like aerospace, medical, and industrial.

- EMS business expects ongoing capex of about INR 200-300 crores per annum for volume growth in FY '26 and '27, largely self-funded. - Semiconductor assembly project has a total capex of INR 3,300 crores, with 70-75% government subsidy; to be fully consumed by FY '28-'29. - HDI PC Board project involves INR 1,400 crores capex, also largely government-subsidized (~60%); to complete by FY '28-'29. - Total upcoming capex across semiconductor and PC board projects is about INR 4,800 crores through FY '28-'29. - OSAT project in Sanand, Gujarat underway with government approval; expected revenues starting Q4 FY '26. - HDI PC board project approved in Tamil Nadu; revenue generation expected Q4 FY '26. - Strategic QIP planned to support geographic expansion (U.S., Europe, South Asia), inorganic acquisitions, enhancing ODM capabilities, and technology deepening. - Target inorganic acquisitions of smaller firms (INR 3.5-5 crores ticket size) to expand footprint and portfolio.

- Kaynes Technology is planning a Qualified Institutional Placement (QIP) for future funding, currently awaiting approval from an EGM to execute it quickly. - The QIP proceeds are intended for strategic growth beyond current businesses, focusing on: - Geographic expansion (North America, Europe, South Asia). - Inorganic acquisitions, including companies that complement or add new technologies. - Strengthening technology footprint in niche areas like semiconductors and ODM capabilities. - Current businesses (ESDM, semiconductor assembly, PC board assembly) are funded through FY '28-'29. - No immediate current debt fundraising mentioned; capex for next two years is expected to be partly funded by government subsidies and internal accruals. - The company expects positive operational cash flow by Q4 FY '25, reducing reliance on external debt.

- Order book surged from INR 54,228 million at the end of Q2 FY '25 to INR 60,471 million at the end of Q3 FY '25. - Monthly order inflow increased from INR 3,188 million in Q2 FY '25 to INR 4,285 million in Q3 FY '25. - Order book includes significant orders in aerospace, defense, smart meters, automotive (especially exports), medical, and IT sectors. - Smart meter segment has potential to achieve nearly INR 1,000 crores annually in the next 12 months. - Aerospace orders are expected to recover and grow significantly in FY '26. - Railway segment currently delayed due to elections but expected to see significant resurgence post-budget in the next 4 years. - Exports contribute about INR 800 crores in the INR 6,000 crores order book, expected to rise to 20-25% by FY '26 with new PC board and semiconductor assembly businesses. - Execution challenges due to earlier election-related delays are expected to normalize with increased order inflow and ramp-up in coming quarters.