Kaynes Technology stock rises 8% on govt nod to Rs 3,307-crore chip plant in Gujarat, what brokerages say

Shares of Kaynes Technology India surged over 8% in early deals in Tuesday after the firm said the Union Cabinet approved the proposal of Kaynes Semicon Private Limited, a wholly owned subsidiary of Kaynes Technology India to set up a semiconductor unit at Sanand, Gujarat. The proposed unit will be set up with an estimated investment of Rs 3,307 crore. The capacity of this unit will be 60 lakh chips per day. Kaynes Technology stock rose 8.5% to Rs 5052.25 against the previous close of Rs 4656.95 on BSE. Market cap of the firm stood at Rs 30,964 crore. The stock has risen 143% in a year.

Total 0.54 lakh shares of the firm changed hands amounting to a turnover of Rs 26.65 crore. Kaynes Technology shares have a one-year beta of 1.2, indicating very high volatility during the period. In terms of technicals, the relative strength index (RSI) of Kaynes Technology stands at 50.2, signaling it's trading neither in the overbought nor in the oversold zone. 

Kaynes Technology shares are trading higher than the 5 day, 10 day, 20 day, 30 day, 50 day 100 day, 150 day and 200 day moving averages.

“The chips produced in this unit will cater to a wide variety of applications which include segments such as industrial, automotive, electric vehicles, consumer electronics, information technology telecom, mobile phones, etc,” said Kaynes Tech in a communication to bourses.

Kotak Institutional Equities has an add call on the stock with a price target of Rs 4,950.  The brokerage said receiving approval to set up an OSAT facility paves way for the company to enter into semiconductor value chain.

“Its near-term focus will be to ramp up execution. However, over medium term, focus would be on shifting rev toward advance packaging solutions,” said  Kotak.

Global brokerage Morgan Stanley is overweight on the stock with a price target of Rs 3,845. The government has cleared the company’s proposal to set up a semiconductor plant in Gujarat.

This is positive, as pending govt. approval remained an area of investor concern. The OSAT venture could garner incremental potential revenue of Rs 30-35 billion by F30 (asset turns of 1- 1.3x), said Morgan Stanley.

Kaynes Technology India is primarily engaged in design and manufacturing of advanced electronic modules and solutions catering to a wide range of industries.