Governance concerns need not involve fraud to erase billions in market value. Kaynes Technology’s nearly 60 per cent decline from its October 2025 peak shows how repeated guidance revisions, disclosure lapses, weak cash conversion and stretched working capital can undermine investor confidence despite strong revenue growth, according to a report by corporate governance advisory firm InGovern.
Kaynes has undergone one of the sharpest valuation resets in the Indian EMS space due to “a combination of guidance revisions, elevated working-capital intensity, cash-flow concerns and heightened scrutiny of certain financial disclosures.” According to the report, investor focus gradually shifted from the company’s growth prospects to “cash conversion, execution discipline, disclosure quality and governance oversight.”
Guidance Miss
During FY26, Kaynes reported revenue of ₹3,626 crore, up 33 per cent year-on-year, EBITDA of ₹574 crore with a margin of 15.8 per cent and profit after tax of ₹364 crore. The company also maintained an order book of over ₹8,000 crore.
However, the report said that the company materially missed its original FY26 revenue guidance of ₹4,500 crore after successive downward revisions during the year. Working capital stood at 125 days at the end of FY26, against the company’s earlier guidance of 85 days.
“A key area of investor focus was the gap between the original FY26 revenue guidance of ₹4,500 crore and the reported FY26 revenue of ₹3,626 crore,” the report said.
Multiple downward revisions over the year indicate that management’s forward visibility was weak, or its guidance discipline was too aggressive for the underlying cash and execution reality.
Accounting Scrutiny
The report also revisited the disclosure-related developments that surfaced in December 2025 following observations made by Kotak Institutional Equities on related-party transaction disclosures, inter-company balances and accounting treatment for acquisitions and intangible assets.
Kaynes had clarified that certain transactions were inadvertently omitted from standalone financial statement disclosures but were eliminated appropriately during consolidation and that the issue related to disclosure and presentation rather than recognition of the underlying transactions.
From a governance perspective, InGovern said the episode showed “the importance of maintaining consistency and completeness across statutory filings”, adding that it increased stakeholder focus on financial reporting controls and review processes.
The developments lead to CRISIL placing certain bank facilities under “Rating Watch with Developing Implications”, citing accounting and reporting-related observations along with working-capital intensity, while CARE Ratings reaffirmed its ratings with a stable outlook, recognising the company’s operating capabilities and market position.
Despite the governance concerns, Kaynes continues to retain attractive long-term positioning through its differentiated EMS and OSAT capabilities and its growing presence in industrial end markets, the report said.
Going forward, it said rebuilding investor confidence will depend on demonstrable improvement in working-capital efficiency, cash-flow generation, disclosure controls, predictable execution and transparent communication.