Kaynes Know-how India Ltd shares hit a brand new 52-week excessive of ₹6,485 apiece on Tuesday forward of the corporate’s announcement that it acquired a 54% stake in Sensonic GmbH, an Austrian supplier of distributed acoustic sensing (DAS) options.
By integrating Sensonic’s fiber optic sensing know-how with its manufacturing capabilities, Kaynes goals to ship improved railway infrastructure options targeted on security, operational optimization and effectivity. Within the first half of FY25 (H1FY25), Kaynes’ railway vertical contributed 7.6% of its complete income, with main purchasers together with Siemens, Frauscher and Hitachi.
The acquisition is thru a main infusion of about ₹45 crore into the share capital of Sensonic GmbH. Additional, further monetary help of about ₹130 crore could be offered to Sensonic GmbH upon request in a number of tranches.
Diversification push
The acquisition aligns with Kaynes’ aim of diversifying its market outreach. Nonetheless, the success of this acquisition would rely upon seamless integration and Kaynes’ capability to deal with execution challenges successfully, guaranteeing it may ship the anticipated development and worth.
In September, Kaynes additionally acquired Iskraemeco India, a sensible metering options supplier for ₹43 crore. These acquisitions mirror the corporate’s efforts to broaden into high-growth sectors with higher margins, complementing its aerospace and IT companies.
Kaynes can also be integrating outsourced semiconductor meeting and check (OSAT) and printed circuit board (PCB) manufacturing into its operations. This transfer is predicted to cut back dependency on exterior suppliers, improve product high quality and reliability, decrease prices, and enhance competitiveness. Nevertheless, delays within the OSAT facility underneath improvement in Gujarat might impression challenge timelines and monetary efficiency.
For now, traders are sitting on good-looking returns, with the inventory appreciating over 130% to this point in 2024. The corporate has been capable of ship on development, and traders have given a thumbs up. “Its income has been rising at a mean fee of about 58% during the last eight quarters, and we imagine this momentum to additional strengthen because of the execution of a robust order guide at hand,” mentioned analysts from Motilal Oswal Monetary Providers of their September quarter outcomes (Q2FY25) evaluate report.
“Margins are additionally anticipated to broaden because of a beneficial enterprise combine towards high-margin sectors (industrials-smart meter, aerospace and railways),” they added.
Kaynes’ order guide elevated to ₹5,422 crore as of September finish from ₹5,038 crore as of June finish, enhancing income visibility. The corporate has maintained its income goal of surpassing ₹3,000 crore for FY25. Kaynes’ H1FY25 income was ₹1,076 crore, up 63.5% year-on-year. Automotive and industrial (together with EV) verticals contributed 28.1% and 54.3% of H1FY25 revenues, respectively.
The corporate expects H2 to be sturdy, led by a surge in sensible meters execution. Moreover, Kaynes expects an operational Ebitda margin at about 15% in FY25. Ebitda is brief for earnings earlier than curiosity, tax, depreciation and amortization.
“Excessive-growth EMS and the OSAT+PCB initiatives shall catapult Kaynes to a prime line of about $1 billion-plus by FY28E in our view,” mentioned analysts from Nuvama Institutional Equities in its Q2FY25 evaluate report. “Therefore, we’re valuing the inventory on FY29E earnings (40x price-to-earnings ratio), discounted again to yield Dec-25 goal value of ₹6,220 (earlier ₹5,000),” they mentioned.
For perspective, Kaynes’ share value at about ₹6,250 apiece now. The inventory trades at near 90 occasions FY26 estimated earnings, as per Bloomberg knowledge. Motilal Oswal estimates a compound annual development fee of 57% and 64% in income and Ebitda, respectively, over FY24-27. However development prospects, valuations are wealthy, leaving little room for error.
