KERNEX - Kernex Microsys.
📢 Recent Corporate Announcements
Kernex Microsystems has entered into a Joint Venture (JV) agreement with Bharat Heavy Engineering Private Limited to develop advanced railway safety technologies. The partnership will focus on developing a Moving Block System integrated with Automatic Train Supervision (ATS) and Automatic Train Operation (ATO) on the Kavach platform. Kernex will hold a majority 51% stake in the JV, while Bharat Heavy Engineering will hold 49%. This move strengthens Kernex's position in the high-growth Indian railway signaling and safety sector.
- Majority 51% stake held by Kernex Microsystems in the new Joint Venture entity.
- Partnership with Bharat Heavy Engineering Private Limited for advanced railway technology development.
- Focus on Moving Block Systems, ATS, and ATO integrated with the Kavach platform and CTC.
- Profit sharing ratio is flexible and may change based on the specific scope of future projects.
- No related party transactions or changes in management control of the listed entity involved.
Kernex Microsystems reported a significant 97% YoY revenue growth in Q3 FY26, reaching ₹72.6 crore, driven by railway safety projects. However, net profit fell 15% YoY to ₹6.06 crore as finance costs spiked from ₹1.21 crore to ₹9.12 crore. The company's order book remains a major highlight at ₹3,268 crore, providing long-term revenue visibility. Investors should note the margin pressure despite the substantial top-line expansion.
- Revenue from operations increased 97% YoY to ₹7,259.76 lakhs in Q3 FY26.
- Net profit declined 15% YoY to ₹605.88 lakhs due to higher operational and finance costs.
- Total order book stands at ₹3,268 crores, with ₹2,500 crores from LOCO TCAS (Kavach) projects.
- Finance costs rose sharply to ₹912.26 lakhs from ₹121.90 lakhs in the same quarter last year.
- 9M FY26 revenue reached ₹175.64 crores, up from ₹106.70 crores in 9M FY25.
Kernex Microsystems has secured a major domestic contract worth ₹411.17 crore from Banaras Locomotive Works (BLW). The order involves the supply and commissioning of 505 On-board KAVACH Loco Equipment units, a critical safety system for Indian Railways. The project has a strict execution timeline of 12 months, offering significant revenue visibility. This win reinforces Kernex's leadership in the railway safety technology sector and aligns with the national push for rail safety.
- Order valued at ₹411.17 Crores including GST from Banaras Locomotive Works (BLW).
- Scope covers supply, installation, testing, and commissioning of 505 KAVACH units.
- Execution period is 12 months from the date of the purchase order.
- Equipment adheres to the latest RDSO Specification Version 4.0.
Kernex Microsystems (India) Limited has received formal approval from both the National Stock Exchange (NSE) and BSE Limited for the listing and trading of 43,000 new equity shares. These shares were issued and allotted under the company's Employee Stock Option Scheme 2023 (KMIL ESOS - 2023). The shares, which have a face value of Rs. 10 each, are scheduled to be admitted for trading effective from February 3, 2026. This is a standard procedure following the exercise of stock options by employees.
- Approval granted for listing and trading of 43,000 equity shares
- Shares issued under the KMIL ESOS 2023 scheme
- Trading to commence on NSE and BSE from February 3, 2026
- Face value of the newly issued shares is Rs. 10 per share
- Distinctive numbers for the new shares are 16759423 to 16802422
Kernex Microsystems has secured a massive domestic order worth Rs 2,465.71 Crores from Chittaranjan Locomotive Works (CLW). The contract involves the supply, installation, testing, and commissioning of 3,024 sets of On-board KAVACH Loco Equipment based on the latest RDSO specifications. This order is expected to be executed within a 12-month timeframe, providing substantial revenue visibility for the company. This win significantly strengthens Kernex's market position in the specialized railway safety and signaling sector.
- Total order value is Rs 2,465.71 Crores awarded by Chittaranjan Locomotive Works (CLW)
- Scope includes 3,024 sets of On-board KAVACH Loco Equipment (Version 4.0)
- Execution timeline is strictly set for 12 months from the date of the purchase order
- The order represents a significant boost to the company's order book and future revenue
Kernex Microsystems (India) Limited has submitted its quarterly compliance certificate under Regulation 74(5) of SEBI (Depositories and Participants) Regulations, 2018. The certificate, issued by KFin Technologies Limited, confirms that all dematerialization and rematerialization requests for the quarter ended December 31, 2025, have been processed. This filing ensures that the company's share registry is properly synchronized with the national depositories, NSDL and CDSL. As a routine regulatory requirement, this announcement does not reflect any change in the company's business fundamentals or financial health.
- Compliance certificate submitted for the quarter ended December 31, 2025.
- Certificate issued by Registrar and Transfer Agent (RTA) KFin Technologies Limited.
- Confirms that details of dematerialized/rematerialized securities were furnished to BSE and NSE.
- Mandatory filing under SEBI (Depositories and Participants) Regulations, 2018.
Kernex Microsystems has been denied a delivery extension by Chittaranjan Locomotive Works (CLW) for a 2024 order involving 2,500 KAVACH units. The company failed to meet the original timeline due to certification delays, and the formal request for more time was rejected on January 9, 2026. Despite this, management claims there is no adverse impact on financials or future eligibility for Indian Railways tenders. The company intends to repurpose existing inventory for upcoming projects and recently completed bids for new CLW and BLW tenders.
- CLW rejected an extension request for the supply and installation of KAVACH on 2,500 locomotives.
- Project delays were attributed to certification issues rather than manufacturing failures.
- Management states the rejection does not impact technical credentials or future bidding eligibility.
- Existing project inventory will be diverted to upcoming CLW and BLW requirements.
- Results for new locomotive tenders are expected shortly following the completion of the bidding process.
Kernex Microsystems (India) Limited has announced the closure of its trading window starting January 1, 2026, in compliance with SEBI insider trading regulations. This closure is ahead of the declaration of the company's un-audited financial results for the third quarter ending December 31, 2025. The window will remain closed for all designated persons and their immediate relatives until 48 hours after the results are officially declared. This is a standard regulatory procedure for all listed companies in India.
- Trading window closure effective from January 1, 2026.
- Closure pertains to the un-audited financial results for the quarter ended December 31, 2025.
- Window to reopen 48 hours after the announcement of the financial results.
- Applicable to all designated persons, connected persons, and their immediate relatives.
Kernex Microsystems (India) Limited has approved the allotment of 43,000 equity shares to eligible employees under its Employee Stock Option Scheme 2023 (KMIL ESOS - 2023). The shares were issued at an exercise price of Rs. 25 per share, which includes a premium of Rs. 15 over the face value of Rs. 10. This allotment has marginally increased the company's total paid-up equity share capital from 1,67,59,422 to 1,68,02,422 shares. The newly issued shares will rank pari-passu with the existing equity shares of the company.
- Allotment of 43,000 equity shares of face value Rs. 10 each to employees.
- Exercise price fixed at Rs. 25 per share, including a premium of Rs. 15.
- Total paid-up share capital increased to Rs. 16,80,24,220 from Rs. 16,75,94,220.
- Shares issued under the KMIL ESOS - 2023 framework.
- Post-allotment, the total number of issued shares stands at 1,68,02,422.
Financial Performance
Revenue Growth by Segment
The company operates in a single reportable segment (Railway Safety Systems). Revenue grew significantly to INR 189.88 Cr in FY25 from INR 18 Cr in FY21, representing a turnaround driven by the execution of KAVACH (TCAS) orders.
Geographic Revenue Split
Primarily India-based revenue (approx. 99%+) from Indian Railways contracts. The company maintains a wholly-owned subsidiary, Avant-Garde Infosystems Inc, in the USA, though its current revenue contribution is negligible.
Profitability Margins
Operating profit margin stood at 21.55% in FY25. Net profit for FY25 was INR 50.92 Cr, a significant recovery from a net loss of INR 20.41 Cr in FY24, aided by a deferred tax credit of INR 17.54 Cr.
EBITDA Margin
Operating Profit before working capital changes was INR 49.27 Cr in FY25 (approx. 26% margin) compared to a loss of INR 12.24 Cr in FY24, reflecting improved absorption of fixed overheads.
Capital Expenditure
Capital expenditure for FY25 was INR 4.13 Cr, primarily for property, plant, and equipment to support manufacturing scaling.
Credit Rating & Borrowing
CARE Ratings assigned a 'CARE BBB-; Stable' rating for long-term bank facilities (INR 175 Cr) and 'CARE A3' for short-term facilities (INR 100 Cr) in November 2025.
Operational Drivers
Raw Materials
Electronic components, PCB assemblies, sensors, and communication modules for TCAS units, representing approximately 60-70% of total project execution costs.
Import Sources
Not disclosed in available documents, though high-end electronic components are typically sourced from global semiconductor hubs.
Capacity Expansion
Current production capacity is 450 Kavach Units per month and 10 Level Crossing Gates per month (scalable to 25 units per month). The facility spans a 10-acre campus with 265,000 sq. ft. of infrastructure.
Raw Material Costs
Project execution expenses rose to INR 22.47 Cr in FY25 from INR 5.92 Cr in FY24 (up 280%) as project delivery accelerated.
Manufacturing Efficiency
Turnaround in FY25 indicates high capacity utilization compared to previous years where high fixed overheads led to losses.
Strategic Growth
Growth Strategy
Growth is driven by the mandatory implementation of KAVACH (Train Collision Avoidance System) by Indian Railways. Strategy involves leveraging its position as one of only three RDSO-approved vendors and utilizing its 450 units/month capacity to capture a large share of the national rollout.
Products & Services
KAVACH (TCAS) units, Level Crossing Gates, Railway Safety Systems design, and Turnkey Project Execution.
Brand Portfolio
Kernex, KAVACH (patented technology).
New Products/Services
Expansion into Telecom and Defense sectors using embedded and IoT product design services.
Market Expansion
Targeting pan-India railway networks for KAVACH installation and maintenance.
Market Share & Ranking
One of the top 3 players in the Indian Railway safety (KAVACH) market.
Strategic Alliances
Kernex TCAS JV (80% share), VRRC KERNEX CE RVR JV (35% share), and KERNEX VRRC JV (80% share).
External Factors
Industry Trends
The industry is shifting toward mandatory automated safety systems (KAVACH) across the entire Indian Railway network, moving away from manual signaling.
Competitive Landscape
Limited competition with only two other major players (HBL Power and Medha Servo) approved for KAVACH technology.
Competitive Moat
Sustainable moat through patented technology and the 'RDSO Approved' status, which acts as a massive entry barrier due to the multi-year testing and validation process required.
Macro Economic Sensitivity
Highly sensitive to Indian Government/Railway budgetary allocations for safety infrastructure.
Geopolitical Risks
Trade barriers on electronic components could impact input costs for TCAS manufacturing.
Regulatory & Governance
Industry Regulations
Strict adherence to Research Designs and Standards Organisation (RDSO) specifications and SIL-4 (Safety Integrity Level) standards is mandatory for all products.
Taxation Policy Impact
Effective tax benefit in FY25 due to deferred tax credit of INR 17.54 Cr.
Legal Contingencies
Pending income tax disputes at the Commissioner (Appeals) level for AY 2019-20 (INR 0.92 Cr) and AY 2020-21 (INR 3.92 Cr). Statutory auditors qualified their report regarding non-recognition of impairment loss of INR 12.76 Cr for the US subsidiary.
Risk Analysis
Key Uncertainties
Internal control weaknesses noted in discrepancies between bank statements and books (up to INR 29.77 Cr difference with HDFC Bank in Q1 FY25).
Geographic Concentration Risk
Over 95% of revenue is concentrated in the Indian market, specifically with the Ministry of Railways.
Third Party Dependencies
High dependency on RDSO for product approvals and project timelines.
Technology Obsolescence Risk
Risk of technology shifts in railway signaling; mitigated by continuous R&D in TCAS/KAVACH.
Credit & Counterparty Risk
Receivables from government entities (Railways) are generally secure but subject to long working capital cycles; trade receivables increased to INR 14.44 Cr in FY25.