At a Glance
Kaynes Technology is now India’s poster child for electronics manufacturing — but with a P/E of 128, it might be more overbought than a Black Friday power bank. With 97% profit CAGR over 5 years and FY25 PAT at ₹293 Cr, is this a future Foxconn… or just a glorified EMS stock with delusions of semiconductor grandeur?
🔧 Act 1: What Does Kaynes Actually Do?
Let’s decode this electronics unicorn’s pitch:
- ✅ ESDM: Electronics System Design and Manufacturing
- ✅ Concept-to-Commission IoT Solutions
- ✅ Integrated manufacturing for defense, medical, automotive, railways, nuclear, and yes… outer space 👽
- ✅ Recently expanded into OSAT (Semiconductor Assembly & Testing) and HDI PCBs
Basically, it’s the Swiss Army knife of contract manufacturing, now trying to become a fab-lite chip player.
📈 Act 2: FY25 Was a Banger (But Wait…)
FY25 Snapshot:
| Metric | FY25 | YoY Growth |
|---|---|---|
| Revenue | ₹2,722 Cr | ↑51% |
| Net Profit | ₹293 Cr | ↑60% |
| EBITDA | ₹411 Cr | ↑60% |
| OPM | 15% | Stable |
| EPS | ₹45.84 | ↑59% |
📦 Quarterly Revenue → ₹984 Cr in Q4
📈 Quarterly PAT → ₹116 Cr
🧾 Financing latest via QIP at ₹5,625.75/share
🔋 Powering strong growth from IoT, EV components, and defense manufacturing verticals.
🔧 Also acquired Fujitsu’s power module assets in June 2025 – full semicon narrative incoming…
🔎 Act 3: Valuation = Nosebleed?
| Metric | Value |
|---|---|
| CMP | ₹5,864 |
| P/E | 128x |
| P/B | 13.2x |
| Market Cap | ₹37,582 Cr |
| Book Value | ₹444 |
| ROCE | 14.4% |
| ROE | 11.0% |
That’s right.
₹293 Cr profit × 128 P/E = ₹37,500 Cr Market Cap
Now compare that to:
- Syrma SGS (₹9,000 Cr mcap, 52x P/E)
- Honeywell Automation (₹33,000 Cr mcap, 63x P/E)
- LMW (₹16,000 Cr mcap, 203x P/E but 4% ROCE 🤡)
Basically, Kaynes is not even the most overvalued — it’s just priced like it’s 2030 already.
🔥 Act 4: Strengths, Risks & Why FIIs Are Circling
✅ Strengths
- Profit CAGR: 97% over 5 years
- Sales CAGR: 49%
- Net profit tripled in 3 years
- Vertical integration across high-value tech manufacturing
- Low working capital days (102) despite custom builds
- Inventory & debtor cycles improving
🚨 Risks
- High dependence on QIP and FII interest (QIP just launched June 2025)
- Cash flow from ops is negative again (₹82 Cr outflow in FY25)
- ROE still just ~11% — not fab-worthy yet
- No dividend = no payout = high reinvestment risk
- P/E is absurd if FY26 doesn’t deliver another 50% profit jump
🧮 Act 5: Edu Valuation Breakdown
Let’s run a couple of fair value models:
⚙️ Method 1: PEG-Based
- EPS FY25 = ₹45.84
- Growth = 60%
- PEG Fair P/E = 60 → FV = ₹2,750
- FV = ₹2,500–2,800/share
⚙️ Method 2: EV/EBITDA Method
- EBITDA FY25 = ₹411 Cr
- EV/EBITDA avg for global EMS = 25x
- Fair EV = 25 × ₹411 Cr = ₹10,275 Cr
- With cash/debt = equity value ≈ ₹10,000 Cr
- FV = ₹1,500–1,700/share
🎯 Final Fair Value Range: ₹1,500 – ₹2,800
CMP = ₹5,864 → Stock is trading 2x to 3x over upper bound FV
Which means: either Kaynes becomes India’s TSMC… or this valuation is just a semiconductor dream sequence.
🤝 Act 6: Who’s Backing This Beast?
| Shareholder | Mar 2025 |
|---|---|
| Promoters | 57.75% |
| FIIs | 11.17% (↓ from peak) |
| DIIs | 16.98% |
| Public | 14.10% (↑ steadily) |
✅ FIIs/DIIs together hold ~28%
✅ QIP + semiconductor hype keeping sentiment hot
😶 Promoters haven’t added recently, though dilution hasn’t hurt ROE yet
🚀 TL;DR: Kaynes or Caution?
- 🛠️ One of India’s most integrated ESDM plays
- 🧠 Moving into semiconductor backend (OSAT), EV, aerospace
- 🏆 Financial performance is stellar — but P/E at 128 is priced for perfection
- 📉 Any miss in FY26 = stock could deflate faster than a Diwali balloon
✍️ Written by Prashant | 📅 22 June 2025
Tags: Kaynes Tech, ESDM, OSAT India, Semiconductor Stocks, Electronics Manufacturing, High Valuation, EduInvesting, Indian Tech Stocks, FY25 Results, Stock Market India
