Multi bagger stock: 7 reasons why Anand Rathi re-initiates coverage on Kaynes Technology

Multi bagger stock: Domestic brokerage Anand Rathi has re-initiated coverage on Kaynes Technology with a 'buy' call. It has given a share target price of Rs 3,100 and sees over 26 per cent upside in the stock on the back of strong growth going forward. 

The brokerage believes that growth will be driven by: 

>> Development of component/chips ecosystem in India.

>> Capacity expansion on strong order book visibility.

>> Increasing its presence in the domestic market and looking for export opportunities.

Here are seven reasons why Anand Rathi is upbeat on Kaynes Technology: 

1. Diversified product portfolio: 

Kaynes has a diversified product portfolio in automotive, industrial, electric vehicle, railway, medical, aerospace, defence, IoT, and IT, which gives the company an edge. 

2. Capacity for manufacturing at scale

As per the report, the company has an advanced manufacturing infrastructure that enables it to manufacture products at variable or flexible volumes across all industry verticals.

3. Diversified customer base

The company's average relationship with its top-10 customers is more than seven years, and no single customer accounts for more than 15 per cent of its revenue. This shows that Kaynes has a diversified customer base and is not reliant on any one customer.

4. Proven record of consistent financial performance

As per Anand Rathi, the company's revenue is at an all-time high and has strong earnings before interest, tax, depreciation, and amortisation (EBITDA) and profit after tax (PAT) margins. The brokerage also believes the company's working capital will improve going forward. 

5. Bright future of Electronics System Design & Manufacturing

Kaynes Technology has capabilities across the entire spectrum of Electronics System Development and Maintenance (ESDM) services and as per the report. India stands as one of the most significant consumer electronics markets in the Asia Pacific Region which gives an advantage to the company. 

6. Government schemes boosting growth 

Analysts at Anand Rathi believe that the government's scheme for the promotion of the Manufacturing of Electronic Components and Semiconductors (SPECS) and Electronics Manufacturing Clusters (EMC) will boost the growth of Kaynes Technology. 

7. Expansion plans showing business visibility

Partnership with DigiLens Expands Technology Ecosystem to scale waveguide manufacturing AR glasses, entering Outsourced Semiconductor Assembly and Test (OSAT) business, adding MNC client in the railway sector, and expanding its electric vehicle (EV) segment will all give an edge to Kaynes Technology. 

Conversely, Anand Rathi sees the following risks: 

>> Raw material sourcing risks

>> Freight rate sensitivity

>> Intensified competition due to a large industry size 

>> Industry-specific slowdown. 

Currently, as of 12:41 p.m. shares of Kaynes Technology traded 1.2 per cent higher at Rs 2485.6 apiece. In a year, Kaynes Technology has given a multi-bagger return of over 155 per cent as against Nifty50's rise of 24 per cent. 

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