Incorporated in 2008, Karnataka-based Kaynes Technology is an end-to-end and IoT solutions-enabled integrated electronics manufacturing company.
The issue consists of issuance of fresh equity shares worth Rs 530 crore whereas existing shareholders and promoters will offload 55,84,664 equity shares via offer for sale (OFS).
The company has trimmed its block for the fresh issue which was proposed to be Rs 650 crore earlier as it raised the funds via pre-IPO placement in consultation with the managers of the issue.
Marquee investors – Acacia Banyan Partners, Volrado Venture Partners Fund II, IIFL Special Opportunities Fund and White Oak – have invested in the company at a price of Rs 619.07 per share, about 5.5% higher than the IPO price.
The net proceeds from the fresh issue will be utilised towards repayment or prepayment of certain borrowings, funding capex for expansion of existing manufacturing facilities, investments in its subsidiary, working capital needs and general corporate purposes.
The company provides manufacturing and life-cycle support for players in the automotive, industrial, aerospace and defence, outer-space, nuclear, medical, railways, Internet of Things (IoT), Information Technology (IT) and other segments.
Kaynes Technology operates eight manufacturing facilities across India in Karnataka, Haryana, Himachal Pradesh, Tamil Nadu, and Uttarakhand.
For the year ended on March 31, 2022, it reported a net profit of Rs 41.68 crore with a revenue of Rs 706.25 crore. For the three months ended June 30, 2022, its net profit stood at Rs 10.46 crore with a revenue of Rs 199.27 crore.
DAM Capital Advisors and
are the book-running lead managers to the issue, whereas Link Intime India has been appointed as the registrar to the issue.
Kaynes Technology allotted 43.76 lakh equity shares to anchor investors at Rs 587 apiece, aggregating to Rs 257 crore, according to a circular uploaded on the BSE website.
Nomura, Goldman Sachs,
Mutual Fund (MF), Axis MF, Aditya Birla Sun Life MF, Tata MF, MF and WhiteOak Capital are among the anchor investors.
Here is what a host of brokerage firms said about the initial public offering of Kaynes Technology:
Rating: Subscribe with Caution
At the higher price band, Kaynes is demanding an EV/Sales multiple of 4.1x, which is at a premium to the peer average. Thus the demanded valuation seems to be stretched, said Choice Broking in its IPO note.
“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,” it added.
The post-issue P/E works out to be 69x FY22 EPS which is in line with the peers like Syrma SGS Technology and
, said Angel One. However, Kaynes has better revenue and PAT CAGR, it added.
“As the future growth of the company is currently factored in its issue price, we believe that current valuations are reasonable,” said the brokerage firm with a neutral rating on the issue.
The company aims to implement comprehensive backward integration measures by manufacturing in-house components and get into deep competencies in design of integrated circuits and chip sets, said Reliance Securities.
“In view of strong financials, diversified business model, long-standing relationships with marquee customers, global certifications, strong supply chain and sourcing networks we assign a subscribe rating,” it said.
At the IPO price of Rs 587, KTIL is valued at FY25 P/E of 26.1X. Considering the growth opportunities in the EMS sector due to sector tailwinds and strong fundamentals, Ventura recommended a subscribe rating for the issue.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)