Kaynes Technology tanks 11% on heavy volumes; slips 32% in 3 weeks

Shares of Kaynes Technology India tanked 11 per cent to Rs 5,344.80 on the BSE in Wednesday’s intra-day trade, extending its fall amid heavy volumes. Since January 1, 2025, from its record high level of Rs 7,824.95, the stock of industrial products company has slipped 32 per cent. 

 

The board of directors of Kaynes Technology today approved the fund raising of up to Rs 1,600 crore. The raising of funds through issuance of instruments or security including equity shares or any other eligible securities by way of one or more public and/or private offerings including on a preferential allotment basis and/or a qualified institutions placement and/or rights issue and/or further public offering, the company said.

 

However, in previous calendar year 2024, the stock price of Kaynes Technology had zoomed 184 per cent, as compared to 8 per cent rise in the BSE Sensex. It had skyrocketed 13 times or 1,232 per cent against issue price of Rs 587 per share. The company made its stock market debut on November 22, 2022.

 

Kaynes offers electronics system design and manufacturing (ESDM) services to clients across various industries. The company is primarily involved in contract designing and manufacturing of printed circuit boards (PCB) assemblies, circuit boards and electronic components. Kaynes has contributed electronics modules to the Indian Space Research Organization (ISRO), with the recent successful launch of Chandrayaan 3 (or Moon Expedition) and PSLV-XPoSat.

 

The company had an outstanding order book of ~Rs. 5,422 crore, as on September 30, 2024, providing healthy revenue visibility. The current outstanding order book includes large orders from reputed customers in the automotive, industrial and railways sectors. The industry is witnessing healthy demand and Kaynes Technology expects the same to leverage and enhance its scale, according to ICRA.

 

The company plans to incur significant capex for setting up OSAT and PCB verticals over the next four fiscal years. The total project cost for outsourced semiconductor assembly and test (OSAT) and PCB projects stood at ~Rs 3,300 crore and ~Rs 1,400 crore, respectively. The first phase of the projects are expected to be completed by FY2029, and the investment for this phase would be ~Rs 1,300 crore and ~Rs 700 crore, respectively. 

 

The equity raised through QIP is expected to fund the initial requirement, and the subsequent funding would be through Central and state government subsidies and term debt. However, these projects are exposed to execution risks, given the limited ecosystem in India for such domains, the rating agency said in rationale.

 

A major portion of Kaynes Technology’s raw material requirement is imported from Singapore, China, Hong Kong, the US and other countries, owing to the unavailability of the required raw materials in bulk quantities in India. The company imports 55-60 per cent of its raw materials, thus exposing it to risks of forex volatility, ICRA said.

 

The company derives most of its revenues from the relatively lower value-added PCB assembly business compared to other businesses like box-build and original design manufacturing (ODM). Also, players in the PCB assembly segment face significant competition owing to the relatively low entry barriers to the ODM business. ICRA said it notes that the company has been expanding its product portfolio in the margin-accretive box-build and ODM segments in recent years, to enhance its margins and ward off competitive threats to a certain extent.