Kaynes Technology IPO consists of a fresh issue aggregating Rs 530 crore and an offer for sale of up to 5,584,664 shares. The IPO is being offered in the price band of the Rs 559-Rs 587. Kaynes Technology is an end-to-end and IoT solutions enabled integrated electronics manufacturing player. Kaynes Technology has capabilities across the entire spectrum of electronics system design and manufacturing (ESDM) services.
|Bidding date||10th Nov – 14th Nov’2022|
|Issue Size||₹530 Cr fresh offer and OFS of|
|Issue Size (Rs. Cr. )||₹ 842 – 858 Cr|
|Face Value in Rs.||10|
|Bid Lot shares||25 Shares|
|Price Band||₹ 559 – 587|
|Issue Structure :|
|Retail||35%,51.1 L shares, 300 Cr.|
|Applications for 1x Retail||2.04 lac|
About Kaynes Technology
- Kaynes Technology is an end-to-end and IoT solutions enabled integrated electronics manufacturing player, having capabilities across the spectrum of electronics system design and manufacturing services.
- It has good experience in providing conceptual design, process engineering, integrated manufacturing and life-cycle support for major players in the automotive, industrial, aerospace and defence, outer-space, nuclear, medical, railways, Internet of Things, Information Technology and other segments.
- Kaynes Technology has a total of eight manufacturing facilities in the states of Karnataka, Haryana, Himachal Pradesh, Tamil Nadu, and Uttarakhand.
- These plants had a combined capacity to assemble over 1,500 million components annually.
- Kaynes operations under various business verticals:
- OEM – Turnkey Solutions -Box Build
- OEM – Turnkey Solutions – Printed Circuit Board Assemblies
- OEM – Turnkey Solutions
- Original Design Manufacturer
- Product Engineering and IoT Solutions
- Kaynes is an ISO 9001/14001/45001 BVCI certified company. Their operations comply with global standards and their facilities have 10 global accreditations, making them the most certified ESDM company in India.
- Kaynes Technology has presence in a diverse range of areas.
Anchor Book: Kaynes Technology IPO
- Kaynes Technology allocated 4,376,421 shares to anchor investors at Rs 587 per share to a total of 28 anchor investorswhich resulted in an overall allocation of Rs.256.90 crore. Some top anchor investors listed below
|Anchor Investor||% of Anchor book|
|Volrado Venture Partners||11.68%|
|Nomura India Stock Mother Fund||5.45%|
|IIFL Asset Management Company||5.45%|
|Goldman Sachs India Equity Portfolio||5.45%|
|ICICI Prudential Multi-cap Fund||5.45%|
|Nippon Life India Power & Infra Fund||5.45%|
|Axis Balanced Advantage Fund||5.45%|
|Eastspring Investments India||5.45%|
|HDFC Dividend Yield Fund||5.45%|
|Aditya Birla Sunlife Multi Cap Fund||5.45%|
|Malabar India Fund||5.45%|
|Ashoka India Opportunities Fund||3.50%|
- The mutual fund allocation represents 40.35% of the total anchor allocation.
Kaynes Technology IPO : Financials
|Particulars / (₹ Cr)||Q1FY23||FY22||FY21||FY20|
|Revenue from Operations||199.27||706.25||420.63||368.24|
|Revenue Growth (%)||–||67.90%||14.23%||–|
|EBITDA Margin (%)||12.33%||13.26%||9.72%||11.22%|
|Profit before Tax||13.44||59.03||10.87||11.28|
|Net Profit for the period||10.46||41.68||9.73||9.36|
|Net Profit Margin (%)||5.04%||5.90%||2.31%||2.54%|
|Net Asset Value (₹)||45.3||43.12||29.57||23.47|
|Post Issue share Cap||58.14|
|FV in Rs.||10|
|EPS post IPO FY22||7.17|
|Market Cap Rs. Cr.||3413|
Consolidated figures for q1FY23 are not available.
Salient Points: Kaynes Technology IPO
- The IPO consists of a fresh issue aggregating Rs 530 crore and an offer for sale of up to 5,584,664 shares.
- The selling shareholders in the IPO are Ramesh Kunhikannan (promoter, up to 2,084,664 shares), Freny Firoze Irani (investor, up to 3,500,000 shares). I
- Proceeds from the fresh issue will be used to repay debt, funding capital expenditure for its manufacturing facilities at Mysore and Manesar and funding working capital requirements.
- Itsr Mysuru – Unit – I facility is approved under Electronics Hardware Technology Park Scheme of software Technology Park of India, Bengaluru.
- Their manufacturing facility at Chennai, Tamil Nadu is approved under 100% EOU Scheme of Madras Export Processing Zone, Chennai.
- Both offer incentives similar to special economic zone.
- Kaynes Technology facilities at Manesar, Haryana, Chennai, Tamil Nandu and Parwanoo, Himachal Pradesh are strategically located in close proximity to their customers.
- There has been a decline in the proportion of new customers it has added in the last three Fiscals.
- Do not have firm commitment agreements with the customers.
- Increasing competition in the electronics system design and manufacturing industry may create pressures of pricing and market share that may adversely affect
its business, prospects, results of operations, cash flows and financial condition.
- Kaynes Technology relies on the continued operations of its manufacturing facilities and any slowdown, shutdown or disruption in our manufacturing facilities may be caused by natural and other disasters causing unforeseen damages which may lead to disruptions in its business and operations and could have an adverse effect on its business, results of operations, financial condition and cash flows.
- Kaynes Technology India had negative cash flows from operating activities of ₹ (71.13) million in the three months ended June 30, 2022.
Kaynes Technology IPO: Assessment
- The global electronics system design and manufacturing services market (“ESDM”) was estimated at USD 804 billion in 2020 and is expected to reach USD 1,002 billion in 2025 at a growth rate of 4.5%.
- India contributes to approximately 1.8% of the global ESDM market in 2020.
- There is a strong push from the Government to make India an ideal location for electronics manufacturing in the region.
- Company’s advanced manufacturing infrastructure enables it to undertake a high mix and high value addition of products across industry verticals with the ability to produce such products at variable or flexible volumes.
- Sector tailwinds and diversification are likely to propel growt
- Good orders in hand: As of 30.6.22, Kaynes Technology’s order book stood at Rs. 2,266 cr, with significant additions in in Q1FY23 alone.
- AS per management these order are to be executed over next 18 months.
- On back of good order wins coupled with a strong outlook, company is undertaking sizeable capex.
- Current capacity utilization has crossed 70%.
- Kaynes Technology is benefitting from increase use of eectornics in auto sector. 41% irders are accounted by auto sectors.
- Orders are well diversified across various sectots.
- Kaynes Technology IPO is being offered at a PE of 81.9 times based on its consolidated reanings for FY22.
- Listed peers like Syrma SGS , Dixon Technologies and Amber Enterprises are quoting at a PE of 166, 141 and 62x their FY2022 EPS.
- At this price considerable future growth of the company is currently factored in its price.
- I intend to apply for Kaynes Technology IPO.
Kaynes Technology IPO: Apply or Not (My view Only)
Risk : Low
Expected Reward : Moderate to good Profit to possible small loss on listing.
Listing Gains : Quite likely givn current sentiments. Current GMP ~ Rs. 80-85
Hold for Medium Term: Valuations streched but good tailwinds for sector
Subscription : Expected to be high
Above are my views only. Please do your own diligence.
Standard disclaimer: I am not a SEBI registered analyst and above analysis is for educational purpose only. Iam a postgraduate in engineering & Management . Also Certified in some exams like NISM-Series-V-A: Mutual Fund Distributors Certification, NISM-Series-X-A: Investment Adviser (Level 1) Certification and NISM-Series-X-B: Investment Adviser (Level 2) Examination. This post is my view on the subject matter and is only academic and exploratory in nature. It is not meant to influence investment decisions of investors. I may have bias/vested interest in covered Stock/Mutual Funds/NCD etc. due to my own investment or leaning. Further my understanding of the areas on which I write may be imperfect or incomplete and data could be wrong due to limited time and resources at my disposal. Please do your own due diligence as stock market/MF investments have high degree of inherent risk.