Kaynes Tech Surges 13% on Nomura's 'Buy' Call and PM Modi's Ambitious EMS Growth Target

Shares of electronics manufacturing company Kaynes Technology experienced a sharp rally of over 13% on September 12, following a bullish 'Buy' call by brokerage firm Nomura. The rise in stock price was further bolstered by Prime Minister Narendra Modi's optimistic growth projections for the Electronics Manufacturing Services (EMS) sector in India.

Nomura has set a target price of Rs 5,969 for Kaynes Tech, seeing it as a key player in the rapidly expanding electronics manufacturing landscape. Alongside Kaynes, Nomura also initiated a 'Buy' rating for Dixon Technologies, another major player in the Indian electronics sector, with a target price of Rs 15,567 per share. According to Nomura, while Dixon stands to benefit from the manufacturing of mobile devices, Kaynes Tech is well-positioned to capture the rising demand for electronics in the B2B space.

Strong Growth Outlook for Kaynes Tech

Kaynes Technology’s diversified business model and strong client relationships have positioned it for sustained growth. A recent report by Anand Rathi noted that the company has cultivated long-term relationships with its top 10 clients, averaging over seven years. No single customer accounts for more than 15% of Kaynes' revenue, reducing its dependency on any one client and providing a stable foundation for future growth.

The company is optimistic about its growth trajectory, particularly in FY25, where it expects strong traction across all verticals. Kaynes Tech is on track to exceed its estimated revenue target of Rs 3,000 crore and is aiming for an EBITDA margin of 15%. This bullish outlook aligns with Nomura’s favourable rating, further increasing investor confidence.

READ| India's Semiconductor Mission May Get $10 Billion Boost for New Chip Projects

PM Modi’s Vision for India's Electronics Sector

The surge in Kaynes Tech shares also follows an encouraging statement from Prime Minister Narendra Modi, who set an ambitious goal of growing India’s electronics sector to a $500 billion valuation by 2030. Speaking at the Semicon India event on September 1, PM Modi emphasized the government’s commitment to boosting domestic electronics manufacturing, with a target of creating 6 million jobs in the sector by the end of the decade.

"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," Modi announced. His vision for the electronics industry involves ramping up manufacturing capabilities within India, reducing reliance on imports, and creating a robust ecosystem for semiconductors and finished electronic goods.

This ambitious target has energized India’s EMS sector, including companies like Kaynes Tech, which are now positioned to benefit from the increased focus on local manufacturing. The government’s initiative to offer 50% financial support for semiconductor manufacturing projects is also expected to boost domestic production and reduce dependency on global supply chains.

India’s Semiconductor Ambitions

India’s semiconductor ambitions are gaining momentum, with five major projects worth Rs 1.5 lakh crore currently in various stages of development. This development will augment the chip supply to domestic electronics manufacturers, enabling the country to not only produce semiconductor chips but also assemble finished electronic goods for domestic consumption and export.

The global electronics manufacturing landscape has been undergoing a significant shift, as manufacturers look to diversify their production bases outside of China. Countries like India and Vietnam are emerging as key beneficiaries of this trend. Prime Minister Modi emphasized the importance of resilient supply chains, particularly in democracies like India, where political stability and technological advancement can go hand in hand.

"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," PM Modi said during his address at the Semicon India event, reinforcing India’s commitment to becoming a reliable hub for electronics manufacturing and semiconductor development.

What’s Next for Kaynes Tech?

The combination of Nomura’s bullish outlook and PM Modi’s ambitious plans for the EMS sector has propelled Kaynes Tech into the spotlight. The company’s diversified customer base, strong growth outlook, and commitment to expanding its electronics manufacturing capabilities make it a key player in India’s burgeoning electronics sector.

ALSO READ| Polaris Dawn: SpaceX Makes History with First-Ever Private Spacewalk by Civilian Crew

As India ramps up its domestic manufacturing capabilities, Kaynes Tech is poised to benefit from the increasing demand for locally produced electronics, both for domestic use and export. With government support for the semiconductor industry and a clear vision for the future, Kaynes Tech’s future looks bright as it continues to play a significant role in India’s journey to becoming a global electronics manufacturing powerhouse.

Source: MoneyControl