Kaynes Technology India Limited (KAYNES) announced on May 31, 2025, that CRISIL Ratings Limited has assigned its 'CRISIL A/Positive' rating to the company's Long-Term Bank facilities, which amount to ₹770 crore. The Corporate Credit Rating for Kaynes Technology India Limited has also been reaffirmed at 'CRISIL A/Positive'.

• Key Strengths highlighted by CRISIL include:

  • Extensive experience of the promoters in the Electronic Manufacturing Services (EMS) industry.
  • A diversified end-user industry base, catering to sectors such as automotive, industrial, railways, medical, aerospace, defence, IT, and retail.
  • Sound operating efficiencies and a healthy financial risk profile.
  • A healthy order book of ₹6,596 crore as on March 31, 2025, providing revenue visibility for the medium term (18-24 months).
  • A comfortable capital structure, reflected by a gearing of 0.31 times and a total outside liabilities to adjusted networth ratio of 0.5 times as on March 31, 2025.
  • Planned capital expenditure (capex) of approximately ₹4,700 crore over the next four fiscals for the HD PCB and OSAT divisions, expected to be funded primarily by government grants (~55%) and internal sources (~25-30%), with moderate reliance on external debt.

• Key Weaknesses identified by CRISIL include:

  • Significant reliance on imports for key raw materials (20-30% sourced from China), making operations vulnerable to supply chain disruptions and forex fluctuations.
  • Susceptibility of the operating margin to volatility in commodity prices.
  • Exposure to risks related to the ongoing projects for new OSAT/PCB manufacturing facilities in Tamil Nadu and Gujarat, with timely receipt of government grants and project completion being key monitorables.
  • Working capital-intensive operations, characterized by sizeable inventory (90-130 days) and receivables (70-90 days).

• Liquidity: The company maintains a strong liquidity position, with cash accrual of over ₹340 crore for fiscal 2025, which is sufficient to cover term debt obligations over the medium term. Cash and liquid assets stood at around ₹1,100 crore as on March 31, 2025.

• Outlook: CRISIL Ratings maintains a 'Positive' outlook, believing that Kaynes Technology will continue to benefit from its established market position in the EMS segment, favorable industry dynamics, and incremental revenue streams from the upcoming OSAT/HD PCB divisions.

• Rating Sensitivity Factors:

  • Upward Factors: Strong and sustained revenue growth from the EMS segment with operating margin around 14%, prompt progress of ongoing capex with timely government grants ensuring moderate debt reliance, and sustenance of strong financial risk profile.
  • Downward Factors: Material order cancellations or lower-than-expected demand, sustained decline in operating margin to less than 12%, material delay in ongoing projects leading to cost escalations or significant delay in receipt of government grants, major debt-funded capex/acquisitions, or a stretch in the working capital cycle.

Kaynes Technology India Limited, established in 1988, provides Electronic Manufacturing Services (EMS), primarily focusing on assembly of PCBs. It operates 12 manufacturing facilities and two service centers across India and has recently expanded into product design, development, testing, and after-sales services.