Kaynes Tech snaps 30% rout as stock soars 7% on positive reports

Kotak Institutional Equities, last week, flagged in a report inconsistencies in Kaynes Tech's related party transactions, an ambiguous accounting treatment of goodwill, among other issues

Shares of Kaynes Technologies surged nearly 7 per cent on Tuesday, snapping a four-day losing streak, amid reports of positive views from top brokerages. 

 

The industrial products' stock rose as much as 6.9 per cent during the day to ₹4,068 per share, the biggest intraday rise since September 1 this year. The stock pared gains to trade 6 per cent higher at ₹4,041 apiece, compared to a 0.41 per cent decline in Nifty 50 as of 11:12 AM. 

 

Shares of the company snapped a four-day losing streak. The counter has fallen 45 per cent this year, compared to a 9.4 per cent advance in the benchmark Nifty 50. Kaynes Technologies has a total market capitalisation of ₹27,016.9 crore. 

Bullish views on Kaynes Tech

According to media reports, JPMorgan said that Kaynes Tech is the cheapest stock under their coverage right now, with the price to earnings to growth ratio of 0.7x. It said Kaynes Tech is currently trending below a bear case and is the cheapest in terms of price to earnings to growth.

 

JPMorgan, however, said that there is no change in Kaynes Tech's fundamentals and highlighted the stretched working capital and receivables as key concerns for the stock.

 

Meanwhile, Macquarie maintained its 'outperform' rating on Kaynes Tech, with a price target of ₹7,700 per share, which implies a potential upside of 100% from Monday's closing levels. Kaynes has set an aggressive path for higher value addition, international expansion, and backward integration that should establish its position as a leading ESDM company in India, Macquarie said. 

 

This comes after last week, Kotak Institutional Equities flagged in a report inconsistencies in the company’s related party transactions, an ambiguous accounting treatment of goodwill or reserve adjustments under acquisitions, and sharp additions to intangibles for technical know-how, among other issues at the company.

 

According to Kotak Institutional Equities, Kaynes acquired Iskraemeco and Sensonic (54 per cent stake) in FY25 for a consideration of ₹88.3 crore, recognising a goodwill of ₹114 crore. 

 

However, the company's FY25 consolidated balance sheet does not show a corresponding increase in goodwill. Separately, the brokerage firm observed inconsistencies in the disclosures made by the standalone entity and various subsidiaries on inter-company related transactions for the year and in year-end balances.

Kaynes Tech Q2 results 

Kaynes Technology reported a consolidated net profit of ₹60.208 crore as compared to ₹32.309 crore a year ago, which implies an 86.3 per cent rise. 

 

The revenue of the company for the quarter under review stood at ₹572.116 crore, up 58.55 per cent, as compared to ₹360.84 crore a year ago. The company's total income increased 63.7 per cent to ₹605.66 crore in the quarter under review as compared to ₹369.8 crore.