Kaynes Technology India Limited

Q2 Concall notes :

Kaynes Technology’s Strategic Acquisition of Iskraemeco India: Expanding Leadership in India’s Smart Meter Market

Kaynes Technology India Limited has acquired Iskraemeco India Private Limited with the aim of securing orders in the smart meter market and aspiring to become the largest smart meter manufacturer in India. Iskraemeco’s existing contracts include significant orders from the Power Grid Corporation of India Limited (PGCIL) and the West Bengal government.

The smart metering market presents significant opportunities, with 110 million smart meters already awarded and an additional 110 million yet to be awarded. Kaynes Technology’s management anticipates capturing a share of orders from various Advanced Metering Infrastructure Service Providers (AMISPs) and sees substantial potential in both domestic and international markets for smart metering and other power distribution products.

This acquisition enhances Kaynes Technology’s manufacturing scale and technological expertise in the smart meter sector, enabling the company to address a variety of metering solutions, including gas and water meters. Leveraging its existing capabilities, Kaynes is positioned to meet the growing demand in the smart metering industry.

A new factory in Hyderabad is ramping up production with a target of completing 3.5 million meters in 1.5 to 2 years. The management expects a steady inflow of orders from various AMISPs, supporting increased production capacity. Currently, smart meters contribute approximately 10% to total sales, a figure expected to rise to 15% as production expands. The acquisition is projected to be margin accretive, with no adverse impact on the company’s EBITDA guidance of 15%.

Major competitors in the smart meter space include Genus Power and other established players. Kaynes Technology aims to collaborate with AMISPs rather than compete directly, thereby minimizing conflicts of interest. The company maintains its revenue guidance of ₹3,000 crores for FY’25, with the potential for incremental revenue from the acquisition. Iskraemeco’s past revenues were fully supplied by Kaynes Technology, positioning the latter for stronger financial performance following the acquisition.

The working capital cycle is expected to remain within 90 days, with payment terms structured to minimize cash flow impact. Installation responsibilities for smart meters are shared with AMISPs, allowing timely revenue recognition upon delivery.

Looking forward, the management expresses confidence in the government’s commitment to rapidly deploying smart meters, projecting a faster rollout than in previous years. The integration of Iskraemeco is viewed positively, enhancing Kaynes Technology’s competitive positioning in the market.