This stock has zoomed 900% over its issue price in less than 2 years

Kaynes Technology share price hit a record high of Rs 5,876.60, up 3% on the BSE in Tuesday's intraday trade. Kaynes shares have zoomed 125% in the past five months on a healthy business outlook

Kaynes Technology India shares hit a record high of Rs 5,876.60, gaining 3 per cent on the BSE in Tuesday’s intraday trade in an otherwise subdued market on a healthy business outlook. In comparison, the BSE Sensex was down 0.09 per cent at 81,898 at 10:43 AM.

The stock of the industrial products company has surpassed its previous high of Rs 5,910 that it hit on September 24, 2024. 

In the past five months, the stock price of Kaynes has more than doubled, or zoomed 125 per cent from the level of Rs 2,616.60 that it hit on May 15, 2024 on the BSE.

Currently, Kaynes is trading 10 times higher, or skyrocketed 900 per cent over its issue price of Rs 587 per share. The company made its stock market debut on November 22, 2022.

 

Kaynes is an end-to-end and Internet of Things (IoT) solutions enabled integrated electronics manufacturing player, having capabilities across the entire spectrum of electronics system design and manufacturing (ESDM) services.

On a consolidated basis, the company operates through 14 advanced manufacturing plants. It is currently undertaking capex to enter outsourced semiconductor assembly and test (OSAT) and Bare Printed Circuit Board (PCB) manufacturing.

On September 2, 2024, Kaynes had informed that the central government has approved the proposal of its wholly-owned subsidiary, Kaynes Semicon to set up a semiconductor unit in Sanand, Gujarat.

The proposed unit will be set up with an estimated investment of Rs 3,307 crore, while the fabrication unit will have the capacity to produce six million chips per day.

The chips produced in this unit will cater to a wide variety of applications, including segments such as industrial, automotive, electric vehicles, consumer electronics, information technology telecom, and mobile phones, among others.

Motilal Oswal Financial Services has reiterated its 'Buy' rating on the stock, with a target price of Rs 6,400 (premised on 60x Jun’26E EPS).

Kaynes is also rapidly scaling up its smart meter business to tap into the huge 250 million (Rs 75,000 crore) smart meter market over the next few years. The company recently inaugurated its electronics manufacturing facility in Hyderabad for the production of smart meters, and has acquired its client Iskraemeco.

Smart meters are gaining momentum due to India's RDSS scheme, which aims to replace 250 million conventional meters by calendar year 2025.

As of September 2024, only 14.5 million meters have been installed, but the installation rates are projected to rise, presenting a substantial Rs 63,280 crore opportunity for Advanced Metering Infrastructure Service Providers (AMISPs) and System Integrators (SIs), brokerage firm MOFSL said in a research note.

Kaynes is one of the few companies in the domestic market that has received approval from the Indian government under its semiconductor programme; and it plans to foray into niche technology segments. Though the company’s capex programme is large, reliance on debt is expected to be minimal as the majority of the capex would be funded through Union and State government subsidies and funds raised by Kaynes via qualified institutional placement (QIP) route, according to CARE Ratings.

The ratings agency expects sustained improvement in the company's scale of operations in its existing business, which is expected to generate healthy cash flows that will provide a liquidity cushion to the company amid its ongoing capex.

This would be sufficient for the company to make scheduled debt repayments, which translates into a satisfactory debt service coverage ratio (DSCR) in the near- to medium-term, the ratings agency noted.

CARE expects Kaynes to continue to maintain its dominant position in the ESDM segment and anticipates continuous order flow translating into healthy cash accruals to sufficiently cover its repayments translating into satisfactory DSCR levels.

Further, the revenue stream of the company is diversified, as it caters to businesses across industry verticals such as automotive, aerospace, and defence, industrial, railways, and medical, among others. For the company, its industrial, electric vehicle (EV), aerospace, and strategic electronics verticals led growth due to strong demand. 

Kaynes has also been investing in new initiatives and projects in higher-potential segments to strengthen its competitive edge and integrated ESDM capabilities, and it is gradually increasing its focus on emerging verticals like EV, aerospace/outer space, railways and telecom, according to analysts tracking the company.

Moreover, Kaynes’ order book has been witnessing continuous growth to Rs 5,038 crore as on June 30, 2024, from Rs 2,648 crore as on March 31, 2023.

In the June 2024 quarter (Q1FY25), the company generated revenues of Rs 504 crore, with an Ebitda margin of 13.3 per cent.