Accumulate Kaynes Technology India; target of Rs 7565: Prabhudas Lilladher

Prabhudas Lilladher's research report on Kaynes Technology India

The automotive and industrial segment grew by 28.7%/75.4% in Q2FY26 which contributes 22%/59% to the topline respectively also Margins got expanded by ~200bps to 16.3% mainly due to operating leverage and increased in contribution from ODM segment. KAYNES has maintained its guidance to reach Rs 45bn, with a its margin guidance of ~17% by FY26. In Q2FY26 company is having an order book of Rs 80bn. Kaynes Semicon achieved a significant milestone in Q2FY26 by delivering India’s first commercially manufactured multi-chip module (IPM5) from its Sanand OSAT facility in collaboration with Alpha & Omega Semiconductor and Mitsui & Company, also its PCB manufacturing is expected to begin as planned, contributing to revenue from FY27 onwards.

Outlook

We cut our earnings estimates by 0.3%/0.7% for FY27/28E mainly due to higher Finance Cost and upward our rating to ‘Accumulate’ from ‘HOLD’ due to the significant correction in the stock price. Our DCF-based TP is Rs 7,565 (Earlier 7,427), implying PE of 62x Sep’27E earnings. We estimate FY25-28E revenue/EBITDA/PAT CAGR of 46.0%/48.9%/45.0%, with EBITDA margin expansion of ~90bps.