JPMorgan maintains Overweight on Kaynes despite cash flow worries – here’s what the brokerage says

Kaynes Technology may be down 25% in the last one monthbut JPMorgan isn’t backing away. In its latest assessment, the brokerage maintains an Overweight (OW) rating on the stock, even as it flags serious concerns around cash flows, receivables, and working capital.

According to JPMorgan, the stock’s sharp underperformance — compared to the Nifty’s +2% gain — has been driven almost entirely by sentimentnot fundamentals. Revenue outlook and management guidance remain unchanged since Q2, yet the market has punished the stock due to:

• Higher-than-expected receivables
• Rising working capital requirements
• Provisions for doubtful debts in Q2
• Concerns about sustainability of growth beyond smart meters

Investor conversations, the brokerage says, reveal a clear shift: the market is no longer valuing Kaynes on revenue momentum alone. Instead, cash flow quality has become the defining factor.

So why does JPMorgan still remain Overweight?

Because the long-term story hasn’t changed.

JPM believes Kaynes can regain investor confidence if the company shows meaningful improvement in cash flows over Q3 and Q4. The upcoming 3Q earnings are expected to be the next major catalyst, where analysts will focus heavily on:

• Receivables
• Working capital
• Provisions for doubtful debts
• Balance sheet discipline

The brokerage also notes that the current slide lacks a clear bottom — not because fundamentals are weak, but because sentiment has turnedand no near-term triggers exist before the next earnings cycle.

What needs to happen for the stock to rally?

JPMorgan is clear:
Kaynes must fix the cash flow narrative.
If receivables ease, working capital stabilises, and cash generation improves, the stock could re-rate sharply.

Until then, the brokerage expects volatility but remains bullish over a 12-month horizon.