The Rs 857.82 crore Kaynes Technology initial public offer (IPO) is ready to open for subscription on Thursday. Ahead of its IPO, the end-to-end and IoT solutions enabled integrated electronics manufacturing player allocated 4,376,421 shares to anchor investors at Rs 587 per share.
The IPO consists of a fresh issue aggregating Rs 530 crore and an offer for sale of up to 5,584,664 shares. It will be sold in the Rs 559-Rs 587 price band.
At upper limit of the price band, post-issue PE stands at 69 times FY22 EPS, which is in line with its listed peers such as Amber Enterprises and Syrma SGS Technology. Last heard, the IPO was commanding a grey market premium (GMP) of Rs 11-13 per share.
“Considering the growth opportunities in the EMS sector due to sector tailwinds and strong fundamentals of Kaynes, we recommend a ‘subscribe’ rating with a price target of Rs 675 (30 times FY25 P/E), which represents an upside of 15 per cent over the IPO price in 18 months,” said Ventura Securities.
In its bull case scenario, the brokerage assumed FY25 revenues of Rs 1,800 crore (FY22-25 CAGR of 36.6 per cent), net margin of 9 per cent and FY25 PE of 32 times, to arrive at a target of Rs 892 per share, which suggest a possible 51.9 per cent upside from the issue price.
In its bear case scenario, it has FY25 revenues of Rs 1,300 crore (FY22-25 CAGR of 22.6 per cent),
net margin of 8 per cent and FY25 PE of 27 times, to suggest a target of Rs 483 per share, suggesting a potential downside of 17.7 per cent from the IPO price.
The IPO will conclude on November 14.
Kaynes Technology is an end-to-end and IoT solutions enabled integrated electronics manufacturing player. It has capabilities across the entire spectrum of electronics system design and manufacturing (ESDM) services. ┬аThe company’s 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 Kaynes Technology for its diversified business model, strong and consistent financial performance and experienced management team. What it does not like is the fact that the company is
Against peers, “Kaynes Technology India has better a revenue and PAT CAGRs of 38 per cent and 111 epr cent respectively. But the future growth of the company is currently factored in its price. Thus, we recommend a ‘Neutral’ rating on the issue.”
On EV/Sales, Kaynes is demanding a multiple of 4.1 times, which is premium to the peer average, said Choice Broking.
“The demanded valuation seems to be stretched. However considering the policy tailwinds for the EMS/ESDM sector, KaynesтАЩs diversified business & customer profile and robust expansion in the order book, we assign a ‘Subscribe with Caution’ rating for the issue,” the brokerage said.
The selling shareholders in the IPO included Ramesh Kunhikannan (promoter, up to 2,084,664 shares)and Freny Firoze Irani (investor, up to 3,500,000 shares). Investors could bid for a minimum lot of 25 shares and in multiples of 25 shares thereafter. The offer would include a reservation of up to Rs 1.5 crore for subscription by eligible employees.
Kaynes Technology has a total of eight manufacturing facilities in the states of Karnataka, Haryana, Himachal Pradesh, Tamil Nadu, and Uttarakhand. It had a combined capacity to assemble over 1,500 million components on an annualised basis, as of June 30.
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