Kaynes Technology initial public offer (IPO) will open for subscription on Thursday. The issue, which consist of a fresh issue aggregating Rs 530 crore and an offer for sale of up to 5,584,664 shares, will be sold in the Rs 559-Rs 587. It will conclude on November 14.
At upper limit of the price band, post-issue PE works out to 69 times FY22 EPS, which is in line with its listed peers such as Syrma SGS Technology and Amber Enterprises. Last heard, the IPO was commanding a grey market premium of Rs 10-13 per share.
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. The company's order book stood at Rs 2,266.26 crore as of June 30.
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 generating a majority of its revenue from its top 10 customer only. Increasing competition in the electronics system design and manufacturing industry is seen as a risk.
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, Kaynes’s 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.
The company had in consultation with book running lead managers to the offer had undertaken the pre-IPO placement of 2,338,760 at a price of Rs 555.85 per share, aggregating up to Rs 130 crore. The pre-IPO placement was comprised of a private placement of 1,439,237 shares to Acacia Banyan Partners (Rs 80 crore on October 12) and 8,99,523 shares to Volrado Venture Partners Fund II (₹ 50 crore on October 14).
Copyright©2022 Living Media India Limited. For reprint rights: Syndications Today