Kaynes profit falls 24% as costs, tax rate rise faster than revenue
Revenue grew 40.47% year on year, but operating margin narrowed 1.18 percentage points; sequential margin was nearly flat as costs tracked the sales decline.
Filed 07 Aug 2026, 18:43 IST · after market close · Kaynes Technology India Ltd (KAYNES)
Key takeaways
- Revenue grew 40.47% year on year, but expenses grew faster at 42.47%, narrowing operating margin by 1.18 percentage points.
- Net profit fell 24.37% year on year as the tax rate rose 13.44 percentage points and interest expense increased 30.64%.
- Operating margin at 15.60% was 1.10 percentage points above the 14.50% median for 82 reported Industrials peers.
Price around the results
Revenue growth did not convert into operating leverage
Consolidated revenue increased 40.47% year on year to Rs 946.02 cr, but expenses rose faster at 42.47%, leaving operating profit growth at 30.55%. That mismatch narrowed operating margin by 1.18 percentage points to 15.60%. Sequentially, revenue and expenses declined almost in line at -23.87% and -23.88%, so margin was broadly unchanged, up 0.01 percentage points.
Higher tax and financing costs weakened reported profit
Net profit declined 24.37% year on year despite operating profit growth because interest expense rose 30.64% and the tax rate increased 13.44 percentage points. Other income contributed 16.42% of pre-tax profit, so reported earnings also included a meaningful non-operating component. Sequentially, the tax rate rose 0.84 percentage points, while interest expense fell 9.13%.
Margin recovered slightly after a four-quarter slide
Operating margin moved from 17.05% in Q4FY25 to 16.78%, 16.33% and 14.84% over the next three quarters before recovering to 15.59% in Q4FY26 and 15.60% now. The latest quarter therefore breaks the recent decline, but margin remains below the Q4FY25 level. It was 1.10 percentage points above the 14.50% median among 82 Industrials peers that had reported.
Expansion plans sit alongside supply constraints
Management said the company is expanding in the USA through Digicom and in Canada through August Electronics, while developing OSAT capabilities through Kaynes Semicon and backward integration into bare PCBs through Kaynes Circuits. The presentation said Kaynes is moving from manufacturing services toward designing and delivering complete technology products, and also noted two dedicated green-manufacturing lines. Management flagged supplier allocation of scarce inputs to strategic accounts and said MCU and power-device prices had risen 15% to 85%.
No immediate market reaction after the filing
The consolidated results were filed after market close, so there is no reported reaction yet. Across the last eight result reactions, the stock rose five times and fell three times, with a median absolute move of 6.31%, indicating a mixed but typically material response.
Q1FY27 at a glance
Consolidated figures as filed with NSE — filed ahead of third-party databases, not yet independently cross-checked.
| Line item | Q1FY27 | Q4FY26 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹946 cr | ₹1,243 cr | -23.87% | +40.47% |
| Other income | ₹14 cr | ₹42 cr | -65.49% | -46.75% |
| Expenses | ₹798 cr | ₹1,049 cr | -23.88% | +42.47% |
| Operating profit | ₹148 cr | ₹194 cr | -23.82% | +30.55% |
| Operating margin (%) | 15.60% | 15.59% | — | — |
| Interest | ₹37 cr | ₹41 cr | -9.13% | +30.64% |
| Depreciation | ₹37 cr | ₹54 cr | -32.02% | +136.81% |
| Profit before tax | ₹88 cr | ₹140 cr | -37.33% | -8.54% |
| Tax | ₹31 cr | ₹49 cr | -35.83% | +46.42% |
| Net profit | ₹56 cr | ₹91 cr | -38.14% | -24.37% |
| EPS (₹) | ₹8.42 | ₹13.32 | -36.79% | -27.60% |
Operating margin of 15.60% compares with a Industrials sector median of 14.50% across 82 peers that have reported Q1FY27.
What management said
From the company’s own investor presentation. Each point is checked against the source document before it appears here.
Expansion
- The company lists expansion in the USA through Digicom and in Canada through August Electronics.
- Kaynes Semicon is being developed with OSAT capabilities.
- Kaynes Circuits is being developed for backward integration into bare PCBs.
New initiatives
- The company is moving from manufacturing services toward designing, developing and delivering complete technology products.
- The company has two exclusive lines for green manufacturing.
Problems & risks
- Suppliers are rationing scarce inputs to strategic accounts instead of supplying them through the open market.
- MCU and power device prices have increased by 15% to 85%.
What to watch
- Whether operating margin holds above 15.60% after the recent recovery from 14.84%.
- Whether the tax rate moves below 35.79% after the year-on-year increase of 13.44 percentage points.
- Whether MCU and power-device cost increases of 15% to 85% continue to pressure expense growth.