Kaynes Tech shares soar 8% on Cabinet nod to ₹3,300 cr semiconductor plant

Shares of industrial products maker Kaynes Technology India Ltd. hit the day's high at ₹5,052.25 today, up 8%, after the Centre approved the company's ₹3,300 crore semiconductor unit proposal in Sanand, Gujarat.

Kaynes in an exchange filing said the Cabinet chaired by Prime Minister Narendra Modi approved the proposal of Kaynes Semicon Private Ltd, a wholly owned subsidiary of Kaynes Technology India, to set up a semiconductor unit at Sanand, Gujarat.

"The proposed unit will be set up with an estimated investment of ₹3,307 crore. The capacity of this unit will be to assemble, test, mark and the packing of 60 lakh chips per day," says the company.

The company adds the chips produced in this unit will cater to applications, including segments like industrial, automotive, electric vehicles, consumer electronics, information technology telecom, mobile phones, etc.

Notably, the Centre's Programme for Development of Semiconductors and Display Manufacturing Ecosystem in India was notified on December 21, 2021, with a total outlay of ₹76,000 crore. In June 2023, the Cabinet approved the first semiconductor unit proposal in Sanand, Gujarat. In February 2024, three more semiconductor units were approved.

Among those whose proposals have been approved, Tata Electronics is one of them. It is setting up a semiconductor fab in Dholera, Gujarat and one semiconductor unit in Morigaon, Assam. CG Power is setting up one semiconductor unit in Sanand, Gujarat. The construction of all 4 semiconductor units is progressing at a rapid pace and a robust semiconductor ecosystem is emerging near the units.

These 4 units will bring an investment of almost ₹1.5 lakh crore. The cumulative capacity of these units is about 7 crore chips per day.

Shares of Kaynes opened a gap up and hit the day's high at ₹5,052.25 on the BSE. At the current share price of ₹4,821.65, Kaynes shares are trading 10% down compared to the one-year high of ₹5,385 hit on August 21, 2024, and 62% up from a one-year low of ₹1,894.20

At this price, the company's m-cap has surged to ₹30,663.74 crore. Shares of Kaynes Tech have risen 145.20% in the past year and recorded an 81.53% surge in the year-to-date period. In the past six months and one-month periods, the scrip has given 56.25% and 14.03% returns, respectively.

On August 23, 2024, Kaynes inaugurated its cutting-edge electronics manufacturing facility in Hyderabad, marking a strategic expansion. The facility is equipped with the latest manufacturing technologies, including high-precision electronic assembly, 3D optical and AI-enabled state-of-the-art inspection systems, and lead-free/RoHS-compliant processes.

The company says it is designed with sustainability in mind, aiming to minimise environmental impact, while maximising production efficiency. The plant will cater to various sectors such as industrial, automotive, medical electronics, aerospace, and telecommunications.

The company's Q1 FY25 (April-June) profit stood at ₹50.8 crore, up 106% year-on-year, while its revenue grew 70% YoY to ₹504 crore. The company's EBITDA income was recorded at ₹66.9 crore, up 66% year-on-year. Its orderbook surged from ₹4,115.2 crore in Q4 FY24 to ₹5,038.6 crore in Q1 FY25.