Cairns Tech IPO: GMP, key points. Should you subscribe or skip today’s question?

Kaynes Technology India Limited (KTIL) said on Wednesday that it had collected rupee2.57 million shares from anchor investors ahead of the initial public offering (IPO), which is open for subscription from Thursday to Monday, November 14.The company has allocated 4.376 million shares to anchor investors rupee587, total rupee2.57 billion rupees.The company has determined a price range of rupee559 to rupee587 per share.

As of 2pm on day 1, the issue had 0.05x subscriptions, 1.14x bookings in the employee retention category, 0.07x in the retail category and 0.03x in the NII, BSE data shows.

According to market observers, Kaynes Tech stock could trade at a premium (GMP) or rupee75 in today’s grey market. The company’s stock is expected to be listed on November 22, 2022.

Kaynes Tech IPO includes value of newly issued shares rupeePromoters and existing shareholders offered an Offer to Sell (OFS) of Rs 5.3 crore and up to 5.585 million shares. OFS includes the sale of 2.084 million shares by promoter Ramesh Kunhikannan and the sale of 3.5 million shares by existing shareholder Freny Firoze Irani.

“In the higher price range, Keynesian calls for an EV/sales multiple of 4.1x, which is higher than the peer average. As such, the required valuation appears to be stretched. But given the policy tailwinds in the EMS/ESDM industry, Keynesian’s Diversified business and customer profiles and strong expansion in the order book, we assign a ‘cautious subscription’ rating to this issue,” Choice Broking said.

Proceeds from the new issuance will be used to repay debt, fund capital expenditures for its manufacturing facilities in Mysore and Manesar, and fund working capital requirements. The company also plans to invest in its subsidiary Kaynes Electronics Manufacturing Pvt Ltd to build a new factory in Chamarajanagar, Karnataka.

“Kaynes Technology is a leader in end-to-end and IoT-enabled integrated electronics manufacturing. Kaynes serves more than 229 customers in 21 countries and multiple verticals, including automotive, aerospace and defense, industrial, rail, Healthcare and Information Technology. Profits and revenue are both increasing significantly. However, at the upper end of the offering price, the asking price is 83 times earnings (after new offerings) and the multiple is closer to 13 times, which makes the offering look fully priced,” said UnlistedArena’s Co-founder Abhay Doshi.

Founded in 2008, Kaynes Technology is a leading integrated electronics manufacturing company for end-to-end and IoT enabled solutions. The company provides conceptual design, process engineering, integrated manufacturing and lifecycle support to key players.

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