Kaynes Hits 52-Week High, Up 125% YTD on Strong Order Book: Here’s Why

The Indian equity benchmark indices have turned volatile, with frontline indices dipping after a positive start. Amid this market turbulence, one stock making headlines is Kaynes Technology India Ltd. The stock surged nearly 4% on October 15, 2024, hitting a fresh 52-week high of Rs 5,900, marking a significant milestone since its listing. Year-to-date (YTD), the stock has skyrocketed by 125%. Let’s dive into the factors behind this rally and understand what drives Kaynes Technology’s success.

Company Overview: A Leader in ESDM and IoT Solutions

Kaynes Technology India Ltd. (KTIL) is a prominent player in the Electronics System Design and Manufacturing (ESDM) sector. Founded by Managing Director Ramesh Kunhikannan, the company provides end-to-end IoT solutions and integrated electronics manufacturing services, encompassing the entire ESDM spectrum. Kaynes operates through 14 advanced manufacturing plants and is currently investing in OSAT (Outsourced Semiconductor Assembly and Test) and Bare PCB (Printed Circuit Board) manufacturing, positioning itself for future growth.

Key Growth Drivers: Smart Meters and Strategic Acquisitions

One of the most significant tailwinds for Kaynes Technology is its involvement in smart meter manufacturing, a sector set to grow exponentially due to India’s Revamped Distribution Sector Scheme (RDSS). The scheme aims to replace 250 million conventional meters by CY25. As of September 2024, only 14.5 million meters have been installed, leaving a massive Rs 632.8 billion opportunity for Advanced Metering Infrastructure Service Providers (AMISPs) and System Integrators (SIs).

Kaynes manufactures smart meters for clients like Iskraemeco and L&T from its Mysore facility and has expanded its capacity with a new Hyderabad plant, which can produce 4 million meters annually. Furthermore, Kaynes strengthened its foothold in the market by acquiring Iskraemeco India for Rs 492.86 million, boosting its manufacturing and after-sales service capabilities. This acquisition also opens doors for Kaynes to enter smart meter markets for utilities like gas and water.

Strong Rs 50.4 Billion Order Book and Financial Outlook

Kaynes Technology boasts a robust Rs 50.4 billion (Rs 5,000 crore) order book, which is 2.8 times its FY24 revenue. This supports the company’s optimistic projections for FY25, with management guiding for 60% YoY revenue growth and an EBITDA margin of over 15%.

Additionally, Kaynes is making significant strides in the semiconductor space, which promises tremendous potential over the next decade. In the PCB manufacturing segment, the company is focusing on multi-layered products, already signing MoUs with four major clients. Both the OSAT and PCB businesses are expected to make meaningful contributions starting from FY27.

The Road Ahead: Semiconductor and PCB Ventures

Kaynes Technology’s foray into the semiconductor and PCB sectors positions it for long-term success. As these businesses start contributing significantly by FY27, Kaynes is set to become a major player in these high-growth industries, adding more value to its already strong portfolio.

Summary

Kaynes Technology hits a 52-week high on October 15, 2024, surging 125% YTD due to smart meter growth, strategic acquisitions, and a robust Rs 50.4 billion order book.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.