The EMS (Electronic Manufacturing Services) industry in India has shown robust growth and is expected to maintain a positive outlook, driven by increasing demand for electronics, government support, and global shifts in supply chains.
The EMS market is expected to grow at a CAGR of over 20 percent in the next 5-7 years. with the market size expected to exceed $150 billion by 2026, making India a significant player in global electronics manufacturing.
In this article we will look at the recent guidance given by the management of Kaynes Technology India Limited to see what unveils and awaits for the investors of the company
About the Company
Kaynes Technology India Limited is an end-to-end and Internet of Things (IoT) solutions-enabled integrated electronics manufacturer. It is engaged in providing conceptual design, process engineering, integrated manufacturing, and life cycle support for major players across various industries. It has a strong order book of Rs. 5,422.8 Crores.
It offers Solutions for Box Build, Printed Circuit Board Assemblies (PCBAs), ODM, Product Engineering, loT Solutions, smart metering technology, smart street lighting, and inverter technology. It also offers conceptual design and product engineering services.
Kaynes Technologies India Limited offers its products and services to major players in the automotive, industrial, nuclear, medical, railway, aerospace and defence, outer space, nuclear, medical, railways, loT, information technology, and other segments.
Upcoming/ongoing Plans for Semiconductor & Others
Kaynes Technology India Limited’s wholly-owned subsidiary Kaynes Semicon Private Limited’s proposal to set up a semiconductor unit at Sanand, Gujarat with an estimated investment of Rs 3,307 Crores was approved by the Union Cabinet on September 2, 2024.
In addition, Kaynes Technologies India Limited is also investing Rs. 2,800 Crores to set up a semiconductor OSAT (Outsourced Semiconductor Assembly and Test) and compound semiconductor facility at Kongara Kalan near Hyderabad.
It has secured government approval for our HDI PC project, and PC board project in Chennai, and it will shortly be sharing updates on that as well. Both projects will start yielding significant revenues from the fourth quarter of FY26.
Recent Acquisition, Revenue Outlook for Smart Meters
Kaynes Technology India Limited’s acquisition of Iskraemeco has opened up a significant opportunity worth approximately 40 million to 50 million Smart Meters to be executed over several years.
The acquisition of Iskraemeco has opened up a potential revenue opportunity of almost close to about Rs. 6,500 crores over the next several years. This will help Kaynes Technology India Limited secure about 15 – 20 percent of the smart meter orders awarded by various Advanced Metering Infrastructure Service Providers (AMISPs).
Kavach Systems Outlook
The Indian Government is making major plans for investment and implementation of Kavach Systems due to the ongoing derailing and other rail accidents. The future potential of Kavach Systems is estimated to be around Rs. 34,000 Crores, opening major opportunities to the Kavach System providers.
Kaynes plans to be an ODM Player in this segment and it will be allowing this product, once it is approved to be used by all rail contractors and large OEMs with plans to get awarded a large portion of the business. Followed by plans to capture ~15 percent market share and business of ~Rs. 2,000 Crores in 4-5 years.
It has been collaborating with a German player with whom this Kavach System is being developed and it will be available to all the key OEMs once approved. Right now, it is in the proof of concept stage, and it hopes that by year-end to have a working product, to start bidding for projects.
Defence and Aerospace
The management recently mentioned that while it doesnt completely focus just on weapons systems, but all defensive systems, military aircrafts and many more. It also trying to derive benefits from outer space programs from players like ISRO and it believes from FY27 onwards there will be more opportunities, plans, new products, services and many more coming benefitting the end uses.
Future Outlook(Reveue & Other Plans)
From FY 26 onwards, the management has said that we can see some significant increase in exports, aided by, of course, some revenues in the fourth quarter from both OSAT revenues as well as HDI, high-density interconnection, and also, there are areas like instrumentation and other areas in the U.S. that we are working with.
It expects all-around growth in all the business verticals by delivering design capabilities, including ODM, in several high-yield areas such as Kavach in rail signaling and Smart Meter. It also involves a special focus on EMS, and OSAT space, as well as high-density, interconnect printed circuit board manufacturing space.
The management has commented that the second half will show solid growth aiding to cross the revenue milestone of Rs. 3,000 crores in FY25. Also with the trend In terms of EBITDA margin improvement, it is believed to surpass the operational EBITDA by 15 percent this year.
It also has plans to reduce its networking capital closer to about 75, 72 days at the end of the year from last year’s 85 days to improve its efficiency and profitability.
Financials
Kaynes Technology India Limited’s revenue from operations grew by 59 percent from Rs. 361 Crores in Q2FY24 to Rs. 572 Crores in Q2FY25, accompanied by profits of Rs. 32 Crores to Rs. 60 Crores.
In terms of Return ratios, it has reported a return on equity (ROE) of 9.13 percent, and a return on capital employed (ROCE) of 11.66 percent. It has reported a debt-to-equity ratio of 0.27.
Written by: Bharath K.S
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