Kaynes Technology makes stellar debut, lists at 33% premium to issue price

Kaynes Technology India, a leading end-to-end and Internet of Things (IoT) solutions-enabled integrated electronics manufacturing company, made a stellar debut, with its shares listed at Rs 778, a 33 per cent premium over its issue price of Rs 587 per share on the National Stock Exchange (NSE). The stock started trade at Rs 775 on the BSE, the exchange data shows.

Post listing, the stock hit a high of Rs 787 on the BSE and of Rs 786 on the NSE. At 10:02 am, Kaynes Technology traded at Rs 750, with a gain of 28 per cent against its issue price. The stock hit an intra-day low of Rs 749.60 on the BSE. A combined 5.6 million equity shares changed hands on the NSE and BSE in early deals.

The Rs 858-crore public issue of Kaynes Technology had received healthy response from investors, with issue subscribed over 34 times. The portion reserved for the qualified institutional buyers was subscribed 98.47 times, while the non-institutional investor's segment saw bids of 21.21 times. The retail investor portion was subscribed 4.10 times.

Kaynes Technology is having capabilities across the entire spectrum of electronics system design and manufacturing (ESDM) services. The company provides conceptual design, process engineering, integrated manufacturing and life-cycle support for major players in the automotive, industrial, aerospace and defence, outer-space, nuclear, medical, railways, IoT, Information Technology (IT) and other segments.

Demand across the underlying sectors is likely to remain robust and Kaynes Technology is currently at an influx of this demand with support of favourable policy initiatives like PLI, Increasing demand for consumer and industrial electronics, changes in the global manufacturing environment and around 30 per cent expected growth in Indian ESDM market, analysts at Anand Rathi Share and Stock Broker said in its IPO note.

With an impressive 3-year CAGR Revenue/PAT growth of 38 per cent/111 per cent respectively coupled with industry leading operating margins and robust order book of Rs 2,266 crore as of 30th June, 2022. Kaynes will continue to move up the value chain of EMS/ESDM sector. With the fresh issue of Rs 530 crore the company plans to triple its existing capacity in coming years, reduce its debt and fund working capital requirements which further multiplies its growth prospects, the brokerage firm said.

Kaynes Technology is poised to see exponential revenue growth in the coming years on the back of favourable government policies, import substitution and China +1 strategy, according to analysts at Phillip Capital.

Kaynes is in a sweet spot as it caters to many industries such as automotive, industrial, railways, defense, consumer all of which are seeing significant traction in terms of localization in India. Incremental capex planned will be towards expanding its Printed Circuit Board (PCBA) capacity in Karnataka and Haryana in existing facilties (Mysuru and Manesar) as well as a new facility in Chamarajanagar.

The company has a strong customer base, is adding new customers and gaining wallet share with existing customers and has a strong order book. With a constant thrust towards product innovation and R&D and higher backward integration, company will be able to achieve higher operational efficiency in the future, the brokerage firm said in the IPO note.