Kaynes Tech shares tumble 12%, sell-off wipes out nearly Rs 10,000 crore from m-cap in three days

The shares of Kaynes Technology India dropped around 12 percent on December 8, extending significant losses for the third consecutive session after Kotak Institutional Equities raised concerns over inconsistencies in the company's related-party disclosures.

The shares of the company closed at Rs 3,851.50 apiece today. The sharp drop in the share price has resulted in strong market cap erosion for the EMS player.

Kaynes Tech m-cap erosion:

The market capitalization of Kaynes Tech stood at around Rs 35,600 crore at the end of the trading session on December 3 (Wednesday). After Kotak released its report, the shares saw significant decline in the following three sessions.

The market cap of Kaynes Tech today stands at nearly Rs 25,800 crore. This implies a market cap erosion of approximately Rs 10,000 crore in just three sessions of losses since Kotak’s report dampened investor sentiment.

Kotak's allegations, Kaynes' clarification:

In its note, Kotak Institutional Equities said that it has identified multiple mismatches between the disclosures made by Kaynes Technology, Kaynes Electronics Manufacturing, and its subsidiary Iskraemeco for the financial year 2025.

According to the brokerage, Iskraemeco’s filings show purchases of Rs 180 crore from Kaynes Electronics Manufacturing, but this transaction is not reflected in Kaynes Electronics Manufacturing’s own related-party disclosures. Iskraemeco also reported year-end payables of Rs 320 crore to Kaynes Technology and Rs 180 crore to Kaynes Electronics Manufacturing, along with receivables of Rs 190 crore from Kaynes Technology. These balances, Kotak noted, do not appear in the corresponding disclosures of Kaynes Technology or Kaynes Electronics Manufacturing.

Kaynes Technology issued a clarification on December 5, stating that these were inadvertently not disclosed in the standalone financial statements. “This has been rectified and has been noted for future compliance. This transaction was part of the overall financial statement in both the entities,” the firm said.

Kotak further said that almost all of Iskraemeco’s current receivables were shown as due from its parent company, with Rs 45.8 crore outstanding for more than a year.

The brokerage said the inconsistencies warrant closer scrutiny, as they raise questions on inter-company transactions and year-end balances within the group.

Here's what JPMorgan said:

JPMorgan advised investors to avoid "bottom fishing" in the shares of Kaynes Technologies, as it does not see a clear, strong catalyst for the stock till it reports its third quarter results, CNBC-TV18 reported. The international brokerage however continues to remain ‘Overweight’ on the stock, with a target price of Rs 7,550 apiece. This implies an upside potential of nearly 52 percent from the stock’s previous closing price.