Explained: Why Kaynes Technology shares crashed 25% in just two sessions

Shares of Kaynes Technology remained under selling pressure for the second straight session on Tuesday, despite an otherwise positive broader market. The company's share price hit its 20% lower circuit limit, following management’s decision to lower FY25 revenue guidance after reporting December quarter results. While Q3 earnings were broadly in line with Street estimates, investor sentiment was significantly dented.

Extending its losses, Kaynes Technology’s share price opened 7.4% lower at ₹4,877, after a 6.18% drop in the previous session. Within the first two hours of trade, the semiconductor stock plummeted by 20% to ₹4,215.20, reducing the company’s market capitalisation to ₹27,208 crore.

The weakness in the stock can also be linked to the global sell-off in semiconductor stocks, with Nvidia tumbling up to 17% overnight on Wall Street amid mounting concerns about the valuations of artificial intelligence companies. Market fears are centred on the disruptive impact of Chinese startup DeepSeek’s open-source AI model, which is positioned as a competitor to OpenAI’s ChatGPT, potentially challenging lofty chipmaker valuations.

Kaynes Technology shares have witnessed stellar growth over the past nine months, hitting an all-time high of ₹7,824.95 on January 1, 2025, representing a 220% rally from its 52-week low of ₹2,425 on April 15, 2024. However, in the last month, the stock has corrected sharply by 41% as investors booked profits at higher levels. Over the past six months, it has declined by nearly 8%.

In an exchange filing last evening, the electronic manufacturing services company reported a 30% year-on-year (YoY) increase in revenue to ₹661.2 crore, while profit after tax (PAT) jumped 47% YoY to ₹66.5 crore. EBITDA margins improved to 14.2%, compared to 13.7% in the same period last year. The order book grew from ₹3,798 crore in Q3 FY24 to ₹6,047 crore in Q3 FY25.

“We continue to invest in high-potential and high-margin segments, which we expect will help us sustain our growth momentum and establish Kaynes as a differentiated player in this space. We are consistently adding new capabilities, expanding into new geographies, and focusing on large customers and high-growth segments,” said Ramesh Kunhikannan, Managing Director and Promoter of Kaynes Technology India.

Despite strong Q3 numbers, the company revised its FY25 revenue guidance downward to ₹2,800 crore from the earlier estimate of ₹3,000 crore. This adjustment was attributed to delays in executing industrial segment orders worth ₹100 crore during the December quarter, which are now expected to be completed in the March quarter.

Earlier this month, the company’s board approved a ₹1,600 crore fundraiser through the qualified institutional placement (QIP) route.

 (DISCLAIMER: The v iews and opinions expressed by investment experts on fortuneindia.com are either their own or of their organisations, but not necessarily that of fortuneindia.com and its editorial team. Readers are advised to consult certified experts before taking investment decisions.)