Kaynes Technology India, a leading player in end-to-end IoT solutions and integrated electronics manufacturing, boasting a wide range of capabilities in Electronics System Design and Manufacturing (ESDM) Services, has witnessed a significant surge in its shares over the past year, delivering substantial returns to its shareholders.
During this period, the shares have appreciated from ₹973 apiece to the current trading price of ₹2546 apiece, marking a remarkable gain of 162%. The company's shares debuted on the secondary market on November 22, 2022, listing at ₹690 apiece compared to the issue price of ₹587.
The stock maintained positive growth for 15 consecutive months post-listing. However, investors began to book profits, leading to a correction of 11.20% in April, marking the largest monthly drop since its listing.
At current levels, the stock is trading 334% higher than its IPO price, positioning it as one of the most successful IPOs in recent years.
The widespread adoption of IoT devices is currently benefiting companies in the Electronics System Design and Manufacturing (ESDM) sector, such as Kaynes. Additionally, the growing demand for electric vehicles is providing opportunities for Kaynes to develop and manufacture a wide range of connected devices and electronic systems for EV manufacturing.
Additionally, the development and deployment of 5G networks opens up avenues to develop and manufacture advanced telecommunications equipment and devices.
The Indian Electronics Manufacturing Services (EMS) industry, though relatively nascent, has swiftly emerged as a prominent player in the global market over the past three decades. However, it is in the last decade, particularly within the last five years, that the industry has experienced a remarkable surge in prominence and influence.
The sector has notably gained from initiatives such as the PLI (Production Linked Incentive) scheme, which has directed a significant portion of incentives towards it. Through programs like the PLI, substantial investments are being channeled into the electronics sector, particularly in segments like mobile phones and white goods.
By CY26, the global electronics industry is set to hit US$3.1 trillion, growing at a 4.9% CAGR, while the EMS sector would grow faster at a 5.4% CAGR to reach US$1.1 trillion.
The country's share in global EMS is likely to quadruple by CY26 to 7%, touching US$ 80.2 billion, driven by a rapidly expanding domestic electronics market (set to grow by ~25.5% to US$ 282 billion), fuelled by both domestic and export demand, said domestic brokerage firm, Equirus Securities in its latest report.
In the Indian electronics market, TAM for EMS players should increase at a whopping 41.1% CAGR to US$ 81 billion by FY26-end. This, along with GoI’s push towards import substitution under ‘Make in India' and increasing electronics components in devices, remain key growth drivers. The current Indian EMS market mix for B2B (LVHM) and B2C (HVLM) is 70% and 30% respectively, said the brokerage.
Looking at multiple industry tailwinds, Equirus Securities believes this is an opportune time for EMS companies.
In the listed space, it initiated coverage on Kaynes with an 'ADD' rating with an SoTP-based September 25 target price of ₹2,845 apiece.
Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.
