Kaynes Tech: MFs sold Rs 500 crore worth shares in November selloff; key details

Kaynes Technology India saw mutual funds trim their stake in the electronics manufacturing services player in November, amid a sharp selloff that intensified further in December.

Data compiled by Nuvama showed that mutual funds sold about Rs 500 crore, or 10 lakh shares, of Kaynes Technology in November. Their holding declined to about 1.2 crore shares at the end of November from around 1.3 crore shares at the end of October.

The stock fell sharply during the period. From a level of Rs 6,704.50 at the end of October, the scrip declined about 18 per cent in November to around Rs 5,490, followed by a further 24 per cent fall in December so far. Analysts attributed the November decline largely to disappointment over the company’s Q2 performance, particularly on cash flow generation, while the December weakness was triggered by a Kotak Institutional Equities report that raised concerns over accounting practices.

Stock analysts noted that Kaynes’ working capital remained elevated in H1FY26, driven by higher inventory levels at the end of the September quarter and an increase in trade receivables. Following the December selloff, Kaynes Technology hosted a conference call to address investor concerns. Its management provided clarifications on the accounting treatment of goodwill and intangible assets arising from the Iskraemeco and Sensonic acquisitions, progress on receivable management, and steps taken to improve accuracy in related-party transactions, margin reporting, purchase price allocation and related-party disclosures.

Analysts said investors would closely track the company’s ability to turn cash-flow positive and reduce working capital days, noting that downside risks could persist if these issues are not addressed.

Elara Securities said its base case assumed that the company would resolve its cash flow challenges by Q4FY26. The brokerage said concerns around cash flow generation had been compounded by inconsistencies in accounting disclosures. While it stressed that rigorous accounting standards and comprehensive disclosures were critical, Elara believed the market reaction had been disproportionate to the scale of the issues raised, as there was no material impact on growth prospects or fundamentals related to revenue and margins.

After its second-quarter results, Kaynes Technology maintained its full-year revenue guidance of Rs 4,500 crore, implying about 64 per cent year-on-year growth in H2FY26. The company also reiterated its Ebitda margin guidance of 16 per cent for FY26.