Nomura Downgrades Kaynes Tech Goal Amid Good Meter Challenges, Retains ‘Purchase’ Ranking

Good-meter points set off progress reset

Kaynes’ inventory has fallen about 30 per cent over the previous month as in opposition to a 1.4 per cent rise within the Nifty, largely on worries round accounting and collections within the smart-meter enterprise. Administration used a press launch and an analyst name on December 8 to make clear these issues, stating that Kaynes will transfer away from being a service supplier in good meters and can as a substitute give attention to supplying units, with improved assortment phrases. Nomura believes the issues should not corporate-governance associated however replicate reporting and execution points, notably in good meters.

Working capital drag and disclosure lapses weigh on sentiment

Shift in progress combine away from good meters

Given the challenges, Nomura expects Kaynes to reassess its progress ambitions in good meters and as a substitute drive a stronger push in different verticals akin to automotive, railways and aerospace. It estimates the income share of good meters might fall from round 30 per cent in H1FY26 to 17 per cent in H2FY26F and 11 per cent by FY28F, as different segments ramp up.

Earnings estimates and valuation reduce, however upside seen

Reflecting decrease progress and margin expectations, Nomura has reduce its income estimates by 5–9 per cent and trimmed Earnings earlier than curiosity, tax, depreciation and amortisation (Ebitda) margins by 30 foundation factors (bps), main to eight–14 per cent EPS downgrades for FY26–28F. On valuations, the goal price-t-earnings (P/E) a number of has been decreased to 35x from 50x, citing a barely weaker progress outlook and the smart-meter overhang.

Even so, Nomura argues the present valuation of about 26x FY28F P/E (adjusted for subsidiaries) seems enticing given an anticipated 40 per cent EPS CAGR over FY26–28F. It sees key catalysts in:

• Working capital days bettering to under 90 days by FY26F (from 113 days in 1HFY26),
• Sooner ramp-up in non–smart-meter companies, and
• Higher accounting disclosures and transparency.

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