Kaynes Technology Becomes Cheapest Stock in JPMorgan’s Coverage After 40% Slide — Is It a Buying Opportunity?

Kaynes Technology has emerged as the most attractively valued stock in JPMorgan’s entire coverage after a steep 40% correction over the past month pushed its valuation below even the brokerage’s bear-case assumptions. Despite the sharp fall, JPMorgan has reiterated its Overweight rating, citing unchanged fundamentals and potential upside in the coming quarters.

In a note dated December 9, 2025, the brokerage highlighted that the stock now trades at 0.7x PEG, significantly lower than the peer average of 1x. This decline comes even as the Nifty gained nearly 2% during the same period.

Concerns Rise Over Working Capital and Receivables

The sell-off has largely been triggered by investor concerns around elevated working capital and receivables following Q2 results. Kaynes’ net working capital for the first half of FY26 stood at 116 days, compared to 87 days in FY25, driven by higher contribution from its smart meter business, which operates on a longer working capital cycle.

However, JPMorgan said that even under its bear-case assumption—where NWC remains at 116 days through FY26–35—the stock justifies a fair value of ₹4,900, implying a 29% upside from current levels.

Management Expects Improvement

In a business update on December 8, management revealed total receivables of ₹1,360 crore as of Q2 FY26, with smart meter receivables accounting for ₹690 crore. About ₹240 crore is tied to legacy receivables pending for over a year, which the company aims to recover through discounting by March 2026.

The company also expects smart meter contribution to revenue to decline to 11% in the second half of FY26, compared with 28% in the first half. This shift should help normalise the receivable cycle, as the core business has a shorter turnaround.

Valuation at Multi-Year Lows

Kaynes now trades at 41x one-year forward earnings, sharply lower than 72x a month ago and well below its three-year average. JPMorgan has maintained its ₹7,550 price target for September 2026, expecting improving receivables and tighter working capital management to support the stock.

Disclosure Concerns Add Pressure

The stock’s fall has been accelerated by a critical note from Kotak Equities, which highlighted inconsistencies in financial disclosures and related-party transactions involving subsidiary Iskraemeco and Kaynes Electronics Manufacturing. Certain inter-company transactions were reportedly not reflected in consolidated disclosures.

By 9:35 am, the stock had slipped marginally, paring early gains amid weak market sentiment. Kaynes shares are down 50% year-to-date.