Kaynes Technology IPO Review – Should you Avoid?
Mysuru based Kaynes Technology IPO would open for subscription on 10th November, 2022. Kaynes Technology is a leading end-to-end and IoT solutions-enabled integrated electronics manufacturing company. Should you invest in Kaynes Technology IPO? This article would provide IPO details, Dates, Listing Date and conclusion on whether this is good or bad for investment.
About Kaynes Technology Limited
Kaynes Technology is a leading end-to-end and IoT solutions-enabled integrated electronics manufacturing company.
It provides conceptual design, process engineering, integrated manufacturing and lifecycle 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 IPO Details
|IPO Opening Date||10-Nov-22|
|IPO Closing Date||14-Nov-22|
|Issue Type||Book Built Issue IPO|
|Face Value||Rs 10 per equity share|
|IPO Price band||Rs 559 to Rs 587 per equity share|
|Lot Size||25 Shares|
|Min Order Quantity||25 Shares|
|Listing at||BSE and NSE|
|Total Issue Size||Rs. 857.82 Crores|
|Fresh issue||Rs. 530 Crores|
|OFS||Rs. 327.82 Crores|
|Employee Discount||Rs.15 Per Share|
What are the strengths of Kaynes Technology Limited?
1) It is an Internet of Things (“IoT”) solutions enabled integrated electronics manufacturing player with end-to-end capabilities across the Electronics System Design and Manufacturing spectrum
2) Company has a diversified business model with portfolio having applications across industry verticals
3) It has long-standing relationships with marquee customer base
4) It has global certifications for each industry vertical catered to and multiple facilities across India with advanced infrastructure
5) It has strong supply chain and sourcing network
6) Company with track record of consistent financial performance
7) It has experienced promoters and senior management with extensive knowledge of the sector
What are the Objects of the IPO Offer?
Kaynes Technology IPO Size is Rs 857.82 Crores which has OFS and fresh issue
1) OFS for Rs 327.82 Crores – Under OFS, selling shareholders would sell their shares and the company would not get any money from this IPO proceeds.
2) Fresh issue of Rs 530 Crores – Fresh issue would be used for the following:
- Repayment/ prepayment, in full or part, of certain borrowings availed by the Company.
- Funding capital expenditure towards expansion of the existing manufacturing facility at Mysore, Karnataka, and near the existing manufacturing facility at Manesar, Haryana.
- Investment in the wholly owned Subsidiary, Kaynes Electronics Manufacturing Private Limited, for setting up a new facility at Chamarajanagar, Karnataka.
- Funding working capital requirements of the Company.
- General corporate purposes.
Who are the promoters of Kaynes Technology Limited?
Ramesh Kunhikannan, Savitha Ramesh and RK Family Trust are the promoters of the company.
How is the company financial track record?
Here are the total assets, revenues and profits of the company in the last 3 years and 3 months.
|Financial Year ending / Period ending (Amt in Crores)|
|Profit After Tax||9.4||9.7||41.7||10.1|
Why to invest in Kaynes Technology IPO?
Here are the positive factors in this company.
1) Kaynes Technology Ltd is the leading end-to-end and IoT solutions-enabled integrated electronics manufacturing company.
2) Company has generated strong revenue growth in the last 3 years.
3) While the company has low margins in FY20 and FY21, the margins have improved significantly for FY22 and for 3 months ending Q1 FY23.
Risk Factors of investing in Kaynes Technology IPO
1) Company IPO proceeds contains OFS also where such funds would go to selling shareholders and company would not get benefit from this.
2) Company Top 10 customers revenue account for significant revenues for over 60%. In case of loss of any such customers can have impact on company revenues.
3) There is increasing competition in the electronics system design and manufacturing industry. This may create pressure on pricing and market and adversely affect its business.
4) They had negative operating cash flows in the past and continue to have negative cash flows in the future too.
5) Investors should read complete risk factors indicated in the RHP of the IPO document before investing in this IPO.
Kaynes Technology IPO Valuation
Kaynes Technology IPO price band is Rs 559 to 587 per share.
If we consider FY2022 EPS, the P/E ratio works out to be 66x.
If we consider last 3 years weighted EPS, the P/E ratio works out to be 105x.
If we annualize Q1 FY23 EPS, the P/E ratio works out to be 69x.
Means company is asking for the issue price in P/E of 66x to 105x. There are listed peers like Amber Enterprises trading at P/E 62x (Lowest) and Dixon Technologies trading at P/E 137x (Highest) and industry average P/E is 87x. Hence Kaynes Technology IPO share price is fully priced.
How much portion allocated to each group of investors in this IPO?
1) QIB – Not less than 50% of the offered shares
2) NII / HNI – Not less than 15% of the offered shares
3) Retail – Not less than 35% of the offered shares
Is it good or bad for investment?
An investor should always invest in a company that has strong financial track record. This company has generated strong revenue growth in the last 3 years and 3 months. Its margins improved significantly during the same period.
What is Kaynes Technology IPO GMP today?
GMP is nothing but the premium at which the shares are trading in offline market. This is just an indication about the IPO price as it is unorganized market.
Kaynes Technology GMP today as per market observers is between Rs 10 to Rs 20.
Kaynes Technology IPO GMP Chanakya – Nil
Kaynes Technology GMP as per IPOCentral – Nil
Kaynes Technology IPO GMP IPOWatch – Nil
Kaynes Technology IPO GMP IPO Bazar – Nil
Kaynes Technology dates – subscription, Allotment and Listing
|Finalization of Allotment||19-Nov-22|
|Initiation of Refunds||20-Nov-22|
|Credit to Demat Account||21-Nov-22|
|IPO Shares Listing Date||24-Nov-22|
How to buy Kaynes Technology IPO online through Zerodha?
If you do not have Zerodha account, sign-up here and proceed to the next step.
If you have a demat account with Zerodha, you can apply this IPO online using the UPI as a payment gateway. Zerodha customers can apply in this IPO by login into Zerodha Console submitting an IPO application form.
Follow below steps to apply this IPO in Zerodha platform:
1) Visit the Zerodha portal and login to the console.
2) Go to Portfolio and click the IPOs link.
3) Visit ‘Kaynes Technology Limited IPO’ row and click the ‘Bid’ button.
4) Enter your UPI ID, Qty and the Price which you want to bid.
5) Click on ‘Submit’ IPO application form.
6) Visit the UPI App (net banking or BHIM) to approve the mandate.
Kaynes Technology IPO Review – Should you Avoid?
After going through all these points, you might be wondering whether Kaynes Technology IPO is good for investment or not?
Kaynes Technology is a leading end-to-end and IoT solutions-enabled integrated electronics manufacturing company in India. It had strong revenue growth in the last 3 years. While its margins were low in FY20 and FY21, its margins for FY22 and Q1FY23 have improved significantly. Its issue price is fully priced.
On the other side, company IPO proceeds contains OFS also where such funds would go to selling shareholders and company would not get benefit from this. I still feel the issue price is highly priced considering the high P/E ratio.
One can wait and post a listing if such shares are available at discounted prices, they can invest.
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