Nomura sees upside for Kaynes Technology as it taps into EV and smart meter markets By Investing.com

On Thursday, Nomura/Instinet initiated coverage on Kaynes Technology India Ltd (KAYNES:IN) stock with a positive outlook, assigning a Buy rating and setting a price target of INR5,969.00.

The firm highlighted Kaynes Technology’s specialization in providing end-to-end integrated electronics system design and manufacturing (ESDM) services. The company is noted for focusing on small-to-medium-volume, high-tech, high-variety businesses.

According to Nomura/Instinet, Kaynes Technology stands out from its Electronic Manufacturing Services (EMS) peers due to its significant domestic focus, with approximately 85% of its revenue generated within India.

The company also boasts a diversified customer base and is reported to have a superior growth and margin profile. The analyst remarked on the company’s strategic move towards backward integration and expansion into Printed Circuit Board (PCB) manufacturing and Outsourced Semiconductor Assembly and Test (OSAT) segments.

Kaynes Technology has exposure to several market segments that are experiencing strong structural demand tailwinds. These segments include the automotive sector, which contributes 29% to the company’s revenue, particularly in areas related to premiumization and autonomous vehicles. The industrial sector, including smart meters and Electric Vehicle (EV) adoption, accounts for 48% of revenue, while signaling in railways represents 11%.

The firm is also venturing into the server market, which is identified as having a large Total Addressable Market (TAM) and the potential for significant order wins. Nomura/Instinet’s coverage initiation reflects a recognition of Kaynes Technology’s strategic positioning and potential for growth within its various operational sectors.

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