Kaynes Tech shares fall 6% as Kotak flags issues

Kaynes Technology Shares Fall 6% Amid Disclosures Concerns

Kaynes Technology shares dropped 6% on Thursday after Kotak Institutional Equities highlighted discrepancies in inter-company transaction disclosures between the parent and its subsidiaries. The brokerage noted significant unrecorded transactions and receivables, alongside concerns about accounting for goodwill and intangibles.

Subsidiary Disclosures Show Inconsistencies

• Iskraemeco's disclosures show purchases of ₹180 crore from Kaynes Electronics Manufacturing in FY2025.
• Year-end payables of ₹320 crore to Kaynes Technology and ₹180 crore to Kaynes Electronics Manufacturing.
• Receivables of ₹190 crore from Kaynes Technology.

However, none of these transactions appear in the related-party disclosures of Kaynes Technology or Kaynes Electronics Manufacturing, according to Kotak.

Accounting Concerns and Financial Performance

• Kaynes Technology's FY25 Annual Report highlights ambiguous accounting treatment of goodwill and reserve adjustments under acquisitions.
• A sharp addition in intangibles for technical know-how.
• A 22-day increase in the cash conversion cycle (CCC) with high capex resulting in negative free cash flow.

Recent Stock Performance

A stock market darling in the recent bull run, Kaynes shares soared about 950% from its listing in November 2022 till January 2025 to ₹7,822.

Since then, the stock has dropped nearly 39% to ₹4,972 on Thursday.

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