This multi-bagger stock declines 9% post-Q2 results; should you buy, sell or hold?

Kaynes Technology India, an electronic contract manufacturing company's stock slipped over 9 per cent in the morning deals on Wednesday, November 1, and touched the intra-day low of Rs 2,160.3 apiece on the BSE. The downtrend in the stock came after the company posted a decline in margins.

At around 11:38 a.m., shares of Kaynes Technology traded 6.46 per cent or Rs 153.9, lower on the BSE at Rs 2,227.8 apiece. The market capitalisation of the company stood at Rs 12,952.99 crore. The stock ended 2.19 per cent lower at Rs 2329.55 apiece.

On October 31, post-market, Kaynes Technology India reported a consolidated net profit of Rs 32 crore as against Rs 29 crore, which translates to an increase of 12 per cent year-on-year (YoY).

The revenue rose 32 per cent YoY to Rs 361 crore from Rs 273 crore logged in the same period a year ago. The earnings before interest, tax, depreciation and amortisation (EBITDA) grew by 13 per cent to Rs 49 crore as against Rs 43 crore registered in the same period a year ago.

Conversely, the company's margin, a key metric to measure profitability, fell 223 basis points (bps) to 13.57 per cent from 15.8 per cent YoY.

What should investors do?

Morgan Stanley has maintained an 'overweight' rating on Kaynes Technology and has given the target price of Rs 2,440 apiece.

"After making the Shooting Star Candlestick pattern on September 3, 2023, the stock has given a one-sided correction to Rs 2,158. At the current juncture, it has taken support near 100 DEMA," said Jigar S. Patel, Senior Manager, Technical Research Analyst, Anand Rathi Shares and Stock Brokers.

Patel added that support is seen near Rs 2,150 and resistance is seen near the Rs 2,400 mark. Since the daily scale, RSI is seen below 50 levels, the said counter might see selling pressure from higher levels. As of now, no fresh longs are advised.

Kaynes Technology share price: Past performance

Since January 2023, shares of Kaynes Technology India have gained over 200 per cent, outperforming the headline index's rise of over 4 per cent. 

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