Kaynes Tech shares give up gains after initial bounce; Elara cuts target by 30%

Shares of Kaynes Technology Ltd. gave up early gains on Monday, December 15, to trade lower, after the stock had rebounded for two sessions in a row from the recent sell-off.

The stock had ended 5.5% higher last Friday, adding to the 3.5% gain seen during Thursday's trading session. The stock had gained up to 2.5% on Monday.

According to official data, Smallcap World Fund Inc. (Capital ), bought 4.46 lakh shares of Kaynes Technology worth ₹189 crore during Friday's trading session. The shares were purchased at an average price of ₹4,206 per share.

Based on the September shareholding pattern, the Smallcap World Fund Inc. does not feature in the list of public shareholders for Kaynes Tech.

The company's management also addressed concerns with regards to accounting and collections in the smart meter segment, stating that it will be exiting the service model and supply only smart meters going forward.

"While we believe that upholding rigorous accounting standards and comprehensive disclosures is paramount, market reaction to recent events is disproportionate to the scale of disclosure and accounting inconsistencies raised as there is no material impact on growth prospects and fundamentals relating to revenue and margins," Elara Capital wrote in its note on Monday.

The brokerage added that the key for Kaynes hereon will be the company's ability to turn cash flow positive, and reduce the working capital days, failing which, the potential for further downside on the stock remains.

"Our base case is that the company will be able to resolve its cash flow issue by Q4 FY26," Elara stated in its note.

Elara maintained its "buy" rating but cut its price target by 30% on the stock to ₹5,365 from ₹7,670 earlier. The revised price target implies a potential upside of 26% from current levels.

Elara joins the list of brokerage such as Nomura, which issued sharp target cuts for Kaynes Tech post the recent sell-off, but retained their optimistic stance on the stock. Last week, JPMorgan had highlighted that although it remains "overweight" on the EMS player, it advises investors to avoid bottomfishing in the stock.

Shares of Kaynes Tech are trading 0.3% lower on Monday at ₹4,251. Going into today's session, the stock had seen a rebound of 9.6% over the last two days. The stock is down over 40% from its recent 52-week high of ₹7,822.