Kaynes Tech rallies 13% on Nomura's Buy call and PM Modi's upbeat EMS growth target

Nomura has initiated a Buy on the Kaynes Tech as well as Dixon Tech, with targets of Rs 5969 and Rs 15567 per share, respectively

Shares of electronics manufacturer Kaynes Tech are sharply higher by over 13 percent on September 12, after a bullish note by brokerage house Nomura as well PM Modi's upbeat growth projections for the EMS sector.

Nomura has initiated a Buy on the Kaynes Tech as well as Dixon Tech, with targets of Rs 5969 and Rs 15567 per share, respectively, and added that it sees an ideal landscape in harnessing the market for electronics manufacturing within India as well as opportunities for export. While the note calls Dixon a key beneficiary in the manufacturing of mobile devices, Kaynes Tech could benefit from the rising demand for electronics in the B2B space, Nomura said.

Kaynes Tech has build strong and diversified pool of customers, with average relationship with top-10 clients at over seven years, and no single customer accounting for more than 15% of revenue, as per a recent note by Anand Rathi.

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The company said it is upbeat on its growth outlook, expects good traction from all verticals in FY25, setting it on track to exceed the estimated Rs 3,000 crore revenue target and EBITDA margin target of 15%.

The space has also got a leg up after PM Modi on Wednesday set a $500 billion target for India’s electronics sector by 2030, creating 60 lakh jobs. Speaking at the Semicon India event, Modi added that the aim is to manufacture all the electronic devices used in India domestically, a sector that at present stands at a valuation of over $150 billion as per some projections. "Today, Bharat’s electronics sector has grown to over $150 billion. And our goal is even bigger. We want to grow our electronics sector to $500 billion by the end of this decade. This will create about 6 million jobs for the youth of Bharat," PM Modi said at the Semicon India event on September 11.

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India is rapidly ramping up its semiconductor ambitions with as many as five projects worth Rs 1.5 lakh crore at various stages of development, which will augment the chip supply to domestic electronics manufacturers. "This means Bharat will not only make semiconductor chips but also their finished goods," Modi said in his address. Centre is providing 50 percent support for setting up semiconductor manufacturing facilities in India.

There has been a increased interest in manufacturers of electronic devices to widen their manufacturing base outside of China, a trend that has been benefitting countries like Vietnam and India, among others. "Resilience in supply chains is crucial," said Modi, highlighting India's strong democratic credentials in developing a reliable hub of technological development. "When democratic values are coupled with technology, the positive energy of technology becomes stronger. Conversely, when democratic values are removed from technology, it can quickly become harmful," he added.