Reduce Kaynes Technology, target price Rs 4,600: HDFC Securities

HDFC Securities has a reduce call on Kaynes Technology India with a target price of Rs 4,600. The current market price of the stock is Rs 5,437.85. Kaynes Technology India, incorporated in 2008, is a Small Cap company with a market cap of Rs 34822.18 crore, operating in General sector.

Kaynes Technology India's key products/revenue segments include Electrical Consumer Durables and Sale of services for the year ending 31-Mar-2024.

Financials

For the quarter ended 30-09-2024, the company has reported a Consolidated Total Income of Rs 605.67 crore, up 13.79% from last quarter's Total Income of Rs 532.28 crore and up 63.78% from last year same quarter's Total Income of Rs 369.80 crore. The company has reported net profit after tax of Rs 60.21 crore in latest quarter.

Investment Rationale
According to HDFC Securities, Kaynes Technology sustained its accelerated growth momentum with revenue growing by 59% YoY (-4% vs HSIE/consensus). The growth was broad-based across segments led by industrial (+125%), automotive (+28%), IoT/consumer (+74%) and medical (+35%). Moreover, box-build revenue grew by 81% YoY, contributing towards 51% of revenue. Given the increasing mix of higher margin segments, EBITDAM expanded by 80bps YoY to 14.4%, leading to EBITDA growth of 68% YoY. APAT grew by 86% YoY to Rs 602 million, aided by 3.7x increase in other income (unutilised proceeds from QIP).

Given a healthy order book (Rs 54.2 billion) aided by large order wins in high-margin segments (aerospace, outerspace, strategic electronics and medical), management remains upbeat of crossing Rs 30 billion in revenues in FY25 along with a 100-bps YoY expansion in EBITDAM. Construction of both its bare PCB and OSAT project have commenced and is expected to start commercial operations by Q4FY26. The brokerage has raised FY25-27 earnings by 1-6% and arrived at a revised target price of Rs 4,600 (EMS: 50x Sep?26 EPS; OSAT/bare PCB: Rs 310/160 per share). It has maintained a REDUCE call.

Promoter/FII Holdings
Promoters held 57.75 per cent stake in the company as of 30-Sep-2024, while FIIs owned 14.92 per cent, DIIs 16.07 per cent.