Kaynes Tech stock could rise 29% after JPMorgan bear-case hint
Kaynes Tech stock could rise 29% after JPMorgan bear-case hint
JPMorgan pins a bear-case fair value of Rs 4,900 for Kaynes Technologies, signaling 29% upside from current levels amid improving receivables and working capital dynamics.
JPMorgan on Tuesday said the recent plunge in Kaynes Technologies' shares has left the stock below its bear-case target and noted it’s the cheapest in its coverage on a PEG basis. The bear-case fair value is Rs 4,900, implying about 29% upside from current levels, while its higher-implied bull target stands at Rs 7,550, suggesting the stock could nearly double if conditions improve. The broker, while maintaining a cautious tone, added that there has been no change in fundamentals around revenues and margins; the key concern remains stretched working capital and receivables after the September quarter results.
JPMorgan highlighted that 1H26 net working capital (NWC) stood at 116 days versus 87 days in FY25, driven by a larger contribution from smart meters to revenues. The smart-meter cycle runs longer—roughly 90–120 days—compared with the core business at 60–90 days. In its bear-case DCF, the bank assumes an NWC of 116 days over FY26–35E versus a base-case of 75 days, a factor that helps justify the Rs 4,900 fair value and the 29% upside from the current price. The note also stresses Kaynes trades at 0.7 times its PEG, the cheapest in its coverage, versus a peer average near 1x. Management had previously highlighted that total receivables were Rs 1,360 crore as of 2026, with smart meters contributing Rs 690 crore; within that, Rs 240 crore pertains to legacy receivables which the company plans to discount to accelerate cash collection by end-March 2026. They also expect the smart-meter contribution to revenues to ease in 2H (roughly 11%) from around 28% in 1H, a development that could help bring down working capital pressures.
Overall, while the bear case envisions significant upside if receivables and NWC improve, the stock remains sensitive to liquidity dynamics and near-term funding needs. Investors will be watching closely how these balance-sheet levers evolve in the upcoming quarters and whether any improvements in NWC can lift Kaynes toward its higher valuation scenarios.
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