Semiconductor stock which is a leading end-to-end and IoT solutions-enabled integrated electronics manufacturer in focus after Motilal Oswal Financial Services initiated a Buy call on it with a 42 per cent upside potential.
Price Action
With a market capitalization of Rs. 41,170 Crores, the shares of Kaynes Technology India Limited were trading at Rs. 6,432 per equity share, down 3.38 per cent from its previous day’s close price of Rs. 6,660.80.
Buy Call Initiated
Motilal Oswal Financial Services Limited has initiated a ‘Buy’ call on Kaynes Technology India Limited an end-to-end and Internet of Things (IoT) solutions-enabled integrated electronics manufacturer, with a Target Price of Rs. 9100 signaling a potential upside of 42 per cent.
Rationale
The Brokerage Kaynes Technology Limited is focused on deepening its presence and aims to improve margins backed by high margin-share business and expects to keep the growth momentum on the back of its diverse offerings along with expected revenue increase due to export opportunities
Kaynes is focused on deepening its presence, and aims to improve margins backed by high margin-share business, also it is confident of sustaining high revenue growth, backed by contributions from new and upcoming segments such as smart meters, aerospace, and Kavach.
With Kaynes expected to be the only rapidly growing, well-diversified, and backward-integrated player within the EMS space, with a strong focus on value addition, the brokerage expects the company to continue its robust earnings momentum on the back of revenue supported by a large orderbook of Rs. 5,400 Cr, continuing order inflows, and margin expansion driven by the rising share of high-margin businesses coupled with operating leverage.
Kaynes Technology India’s exports are expected to account for 20–33 percent of its income by the fiscal years 2026 and 2028. Export revenue growth will be fuelled by large export orders and a growing presence in foreign regions.
According to the management, the export mix will account for 20 percent of overall sales by the fiscal year 2026 and around one-third of total income during the following two to three years.
Lastly Motilal Oswal Financial Services projects Kaynes Technology India to achieve a compound annual growth rate (CAGR) of 60% in revenue, 67% in Adjusted EBITDA, and 74% in Adjusted PAT over FY24-27.
However, an increase in working capital could impact cash flows, supply chain disruptions may affect business operations, and delays in order execution could potentially slow down the growth trajectory.
Future Outlook
Despite a downturn in the EV category, Kaynes Technologies has maintained its FY25 sales growth projection of over 60 percent YoY. Future performance is anticipated to be driven by the long-term development potential of railroads, the strong contributions of smart meters, and the utilization of newly acquired technologies and a new factory.
It has secured government approval for our HDI PC project, and PC board project in Chennai, and it will shortly be sharing updates on that as well. Both projects will start yielding significant revenues from the fourth quarter of FY26.
From FY 26 onwards, the management has said that we can see some significant increase in exports, aided by, of course, some revenues in the fourth quarter from both OSAT revenues as well as HDI, high-density interconnection, and also, there are areas like instrumentation and other areas in the U.S. that we are working with.
It expects all-around growth in all the business verticals by delivering design capabilities, including ODM, in several high-yield areas such as Kavach in rail signaling and Smart Meter. It also involves a special focus on EMS, and OSAT space, as well as high-density, interconnect printed circuit board manufacturing space.
About the Company
Kaynes Technology India Limited is an end-to-end and Internet of Things (IoT) solutions-enabled integrated electronics manufacturer. It is engaged in providing conceptual design, process engineering, integrated manufacturing, and life cycle support for major players across various industries. It has a strong order book of Rs. 5,422.8 Crores.
It offers Solutions for Box Build, Printed Circuit Board Assemblies (PCBAs), ODM, Product Engineering, loT Solutions, smart metering technology, smart street lighting, and inverter technology. It also offers conceptual design and product engineering services.
Kaynes Technologies India Limited offers its products and services to major players in the automotive, industrial, nuclear, medical, railway, aerospace and defence, outer space, nuclear, medical, railways, loT, information technology, and other segments.
Financials & Ratios
Kaynes Technology India Limited’s revenue from operations grew by 59 percent from Rs. 361 Crores in Q2FY24 to Rs. 572 Crores in Q2FY25, accompanied by profits of Rs. 32 Crores to Rs. 60 Crores.
In terms of Return ratios, it has reported a return on equity (ROE) of 9.13 percent, and a return on capital employed (ROCE) of 11.66 percent. It has reported a debt-to-equity ratio of 0.27.
Written by: Bharath K.S
