The initial public offering (IPO) of Kaynes Technology worth Rs 8,578.2 crore is ready to open for subscription on Thursday. Ahead of the IPO, the end-to-end and IoT solution saw the integrated electronics maker allocate 4,376,421 shares at Rs 587 per share to anchor investors.
The IPO consists of a new issue totaling Rs 5.3 crore and a sale offer of up to 5,584,664 shares. It will be sold in the price range of Rs 559 to Rs 587.
At the upper end of the price range, the post-issue PE is 69x FY22 EPS, in line with listed peers such as Amber Enterprises and Syrma SGS Technology. Last heard, the grey market premium (GMP) for the IPO was Rs 11-13 per share.
“Considering the growth opportunities in the EMS sector due to industry tailwinds and Kaynes’ strong fundamentals, we recommend a ‘buy’ rating with a target price of Rs 675 (30x FY25 PER), up 15% over 18-month IPO price,” Ventura Securities said.
In the bull case, the brokerage assumes FY25 revenue of Rs 180 crore (36.6% FY22-25 CAGR), 9% net profit margin and 32x FY25 P/E to reach per share The target of Rs 892, which suggests that the issue price could rise by 51.9%.
Its FY25 revenue was Rs 130 crore (22.6% CAGR in FY22-25) in a bear market scenario,
Net profit margin of 8%, FY25 P/E ratio of 27 times, and a suggested target of Rs 483 per share suggest a potential downside of 17.7% from the IPO price.
The IPO will close on November 14.
Kaynes Technology is an integrated electronics manufacturer supporting end-to-end and IoT solutions. It has the capability to cover the entire Electronic System Design and Manufacturing (ESDM) services. The company’s total order book stood at Rs 2,266.26 crore as of June 30.
Hem Securities has a “subscribe” rating on the issue.
Angel One likes Cairns Technology because of its diversified business model, strong and stable financial performance and experienced management team.What it doesn’t like is that the company is
“Kaynes Technology India’s revenue and PAT CAGRs are 38% and 111 epr% respectively compared to peers. But the company’s future growth is currently factoring in its price. Hence, we recommend giving ‘Neutral’ to this issue ‘ rating.”
In terms of EV/Sales, Kaynes requires a multiple of 4.1 times, which is higher than the peer average, Choice Broking said.
“The requested valuation appears to be inflated. But given the policy tailwinds in the EMS/ESDM industry, Kaynes’ diversified business and customer profile, and strong order book expansion, we give a ‘cautious subscription’ rating on this issue,” the brokerage said.
Selling shareholders in the IPO include Ramesh Kunhikannan (sponsor, up to 2,084,664 shares) and Freny Firoze Irani (investor, up to 3,500,000 shares). Investors can bid for at least 25 shares and then bid in multiples of 25 shares. The offer will include bookings up to Rs 1.5 lakh for eligible employees.
Kaynes Technology has eight manufacturing plants in Karnataka, Haryana, Himachal Pradesh, Tamil Nadu and Uttarakhand. As of June 30, it had a total annual assembly capacity of more than 1.5 billion components.
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