Kaynes Technology shares jump 10% post Q1; here's what JM Financial says

Shares of Kaynes Technology India Ltd jumped 9.53 per cent on Thursday to close at Rs 6,175.10 apiece after the company announced its June quarter (Q1 FY26) results. In its Q1 earnings, Kaynes reported a 34 per cent year-on-year (YoY) increase in revenue to Rs 670 crore, although the figure came in 6 per cent below JM Financial's estimate. Despite the revenue miss, gross margins and profitability showed notable improvement, reflecting an enhanced product mix and operational leverage.

According to JM Financial, gross margin expanded to 41.3 per cent, up sharply from 27.3 per cent in the same quarter last year and 32.1 per cent in Q4 FY25. This improvement was primarily attributed to a shift towards high-margin businesses such as ODM (Original Design Manufacturing) and Product Engineering.

Employee expenses and other operational costs jumped, with staff costs increasing to Rs 58.9 crore from Rs 33.5 crore YoY, and other expenses surging to Rs 105.9 crore from Rs 37.2 crore. Despite the rise in costs, EBITDA rose 69 per cent YoY, coming in line with JM's estimates, with EBITDA margin expanding by 350 basis points (bps) to 16.8 per cent.

Profit after tax (PAT) stood at Rs 74.6 crore, a 47 per cent YoY rise, beating JM Financial's estimates.

On the segmental front, the industrial vertical led the growth, clocking a 43 per cent YoY revenue increase, with JM attributing much of the surge to smart meter orders. The segment accounted for 59 per cent of total revenue, up from 55 per cent a year ago. The automotive segment grew 24 per cent YoY and contributed 27 per cent to overall revenues, while the railway segment grew 17 per cent.

In terms of product mix, the core PCB Assembly business grew 23 per cent YoY, contributing 45 per cent of total revenue, down from 49 per cent last year. Meanwhile, the box-build segment saw a sharp 48 per cent YoY decline, with its share shrinking to 19 per cent from 49 per cent a year ago.

However, the standout performer was Kaynes' ODM & Product Engineering vertical, which posted revenue of Rs 2,400 crore, expanding its share in total revenue to 36 per cent from just 1 per cent YoY. JM Financial highlighted this shift as a key driver behind the company's gross margin expansion.