## Key Takeaways * **54% YoY revenue growth, 60% guided:** Q4 consolidated revenue hit ₹984.5 crore, and management committed to minimum **60% operating revenue growth** for FY26, with at least 50 bps of EBITDA margin expansion. * **Order book doubled, margin-accretive:** The order book surged from ₹4,115 crore to **₹6,597 crore**, with new inflows concentrated in aerospace, industrial and automotive segments that carry margins above current consolidated delivery. * **Two mega-plants racing to year-end completion:** Construction of the OSAT facility in Sanand and the HDI PCB plant in Chennai is in full swing, with both on track for completion by **end of calendar 2025** and first commercial revenues expected in FY26. * **Working capital is the visible friction:** Net working capital days sit at 87, and CFO turned negative due to deferred payment terms on legacy orders from an acquired subsidiary; management is pursuing annuity funding and factoring to improve this in FY26. * **What to watch next quarter:** Whether the smart meter execution bottleneck is fully cleared, progress on signing up OSAT and PCB customers against committed capacity, and any concrete movement on working capital days. --- ## Growth Engine: Order Book & Revenue Runway * **Order book quality improved:** The ₹2,482 crore order book increase came from large global players placing long-term business, and management stated the orders carry an EBITDA profile likely to beat the consolidated EBITDA delivered this year. * **Execution cadence:** The current order book will execute over roughly 1.5 years, providing visibility well into FY27. * **Smart meter recovery:** A Q3 execution delay in the smart meter business, caused by a surge of orders and a new Hyderabad facility ramp, has now been overcome. * **Export ambition:** Management expects at least 20-25% of business to come from outside India over a 4-5 year timeframe, with FY26 already seeing some export contribution from automotive, aerospace and industrial segments. * **Tariff war tailwind:** Large OEMs are seriously considering alternatives to China for new products, and the company is positioning the Canada-India alliance as a strategic alternative to China-based sourcing. > **Sampath:** *"So in terms of growth numbers for our consolidated numbers this year, we can safely say that minimum 60% growth will be there in operating revenues. And we also expect about 50 basis points expansion in our EBITDA numbers, too."* --- ## Strategic Bets: OSAT, HDI PCB & Space Tech * **OSAT plant, Sanand:** Construction on track for completion by end of calendar 2025; pilot lot building expected by July-August, with the first chip targeted for Q2 or early Q3 of this calendar year. Validation will take 3-4 months, and the company plans to take around 6 models this year. * **HDI PCB plant, Chennai:** Construction also on track for year-end 2025 completion; at least five customers are in serious talks and one has issued an RFP. Management expects a significant portion of capacity to be booked by the time the plant comes on stream. * **Revenue start:** Both OSAT and HDI PCB are expected to generate some revenue in FY26, with the PCB business starting in the last quarter of FY26 and semicon business following the same timeline. * **Capex phasing:** FY27 will complete all capex for semicon and PCB; significant capacity utilization in these newer businesses is expected by FY28. * **Space tech entry:** A new subsidiary, Kaynes Space Tech, has been formed, and significant capacity has been set up in Kaynes Mechatronics. The venture is staffed with scientists who previously worked at ISRO and is focused on contributing to national security capabilities. * **Government subsidy mechanics:** Central government subsidy for OSAT comes pari passu with supplier payments; state government contribution arrives with a lag of about 6 months after machines are installed. --- ## Inorganic Growth: Acquisitions & Strategy * **August Electronics (Canada):** Acquired to strengthen the North American footprint; the business is margin-accretive with EBITDA above consolidated levels, serves global customers in instrumentation and telecom that Kaynes did not previously access, and carries 20% organic growth potential in Canada plus a 5-10% spillover effect to India. * **Sensonic acquisition:** A majority stake in a global AI-based rail network safety solution company, adding capability in intelligent rail systems. * **Three-pronged M&A strategy:** Geographic expansion with local production, shifting from a China-plus-US to an India-plus-US sourcing narrative, and targeting acquisitions with short gestation periods that yield immediate revenue and profits. * **Acquisition financing:** No current intention to raise equity for acquisitions; QIP proceeds can be deployed if needed. > **Kannan:** *"Following this acquisition, we are well positioned to present a compelling opportunity to these customers more comprehensively, positioning the Canada-India alliance as a strategic alternative to China-based sourcing."* --- ## Margins: Expansion Levers & Cost Structure * **Margin trajectory:** Consolidated EBITDA margin was 17.1% in Q4 and 15.1% for the full year; PAT margin expanded 62 bps YoY to 10.8%. Management committed to at least 50 bps of EBITDA margin expansion in FY26. * **Order book margin mix:** New order inflows are concentrated in aerospace, industrial and automotive segments, all of which carry margins higher than current delivery, creating a favorable blend shift as they execute. * **Core vs. reported margins:** Core margins are reflected only in consolidated numbers; standalone figures include corporate-level expenses from new hires and pre-operative project development costs that get capitalized. * **Other expenses reclassification:** The sharp jump in other expenses (₹31 crore to ₹101 crore) was partly due to reclassification of certain consumables that should normally sit in the bill of materials but were shown separately over the prior four quarters. * **ODM mix contribution:** ODM capability exists in industrial, railways (Kavach program), and IT/IoT; this mix is expected to increase going forward, though management did not isolate the specific margin delta from ODM alone, offering only a general 50 bps consolidated expansion estimate. --- ## Balance Sheet: Working Capital & Asset Turns * **Working capital pressure:** Net working capital days stand at 87; inventory days improved from 97 to 91, but overall working capital increased due to an acquired subsidiary's legacy orders with pre-agreed deferred payment terms. Future orders in that subsidiary are on full payment terms. * **CFO turned negative:** The other non-current assets line item increased, making cash flow from operations negative, directly linked to those deferred payment terms on legacy acquired orders. * **Remediation plan:** Management is committed to improving net working capital in FY26 through supplier-managed inventory, recourse-free factoring, and better production planning. For smart meter receivables, the company is working on annuity funding by factoring on the customer, with an update expected around Q2. * **Asset turns temporarily lower:** Bulk of the ₹800 crore standalone capex went into customer-exclusive EMS facilities at Chamarajanagar, a global facility with dedicated zones for large customers targeting billion-dollar-plus businesses over 5-10 years. Asset turns will appear lower for a couple of years as a result. * **Capacity utilization improving:** In FY26, asset turns will improve because facilities like Chamarajanagar will start working at much higher capacity; management stated FY26 numbers can be achieved easily even without adding more capacity. > **Sampath:** *"A little bit of lower asset turn is good news in this business because that means that we have committed customers who are likely to give us business."* --- ## Guidance & Commitments | Commitment | Specifics | Timeline | |---|---|---| | Revenue growth | Minimum **60%** growth in consolidated operating revenues | FY26 | | EBITDA margin expansion | At least **50 bps** expansion in consolidated EBITDA margins | FY26 | | OSAT first chip | First chip out; pilot lot building by Jul-Aug, validation takes 3-4 months | Q2 or early Q3 CY2025 | | OSAT & PCB plant construction | Construction completed | End of CY2025 | | HDI PCB commercial revenue | First revenue from HDI PCB business | Last quarter of FY26 | | Semicon commercial revenue | First revenue from semicon business | Last quarter of FY26 | | Capex completion (semicon & PCB) | All capex for semicon and PCB completed | FY27 | | Capacity utilization (new businesses) | Significant capacity utilization in semicon and PCB | FY28 | | Working capital improvement | Improve net working capital via factoring, SMI, better planning | FY26 | | August Electronics growth | 20% organic growth in Canada, plus 5-10% spillover to India | FY26 | | Smart meter receivables factoring update | Update on annuity funding with banks and NBFCs | Around Q2 FY26 | --- ## Key Metrics | Metric | Q4 FY25 | |---|---| | Revenue | **₹984.5 cr**, +54% YoY | | FY25 Revenue | **₹2,721.8 cr**, +51% YoY | | EBITDA | **₹167.9 cr**, +76% YoY | | EBITDA margin | **17.1%** | | FY25 EBITDA margin | **15.1%**, up 101 bps YoY (excl. other income) | | PAT | **₹116.2 cr**, +43% YoY | | FY25 PAT margin | **10.8%**, up 62 bps YoY | | Order book | **₹6,596.9 cr**, up from ₹6,047.1 cr in Q3 FY25 and ₹4,115.2 cr in Q4 FY24 | | Average monthly order inflow | **₹511.4 cr**, up from ₹428.5 cr in Q3 FY25 | | Net working capital days | **87 days** for FY25 | | Inventory days | **91 days**, improved from 97 days | | ROE (adjusted for unutilized QIP proceeds) | **19.4%** | | ROCE (adjusted for unutilized QIP proceeds) | **19.2%** | | FY26 revenue growth guidance | **60% minimum**, implying approx. ₹4,350 cr | | FY26 EBITDA margin expansion guidance | **at least 50 bps** on consolidated basis | | ODM and product engineering revenue mix | **~18%** of revenue | | OSAT total capex | **₹3,400 cr**, with ~₹2,700 cr eligible for govt subsidy | | HDI PCB total capex | **₹1,400 cr** |