Kaynes Technology India Limited (NSE: KAYNES) shares jumped over 6% in early trading on Tuesday after the Indian government approved a proposal by the company’s subsidiary, Kaynes Semicon Pvt Ltd, to set up a semiconductor assembly and testing plant in Sanand, Gujarat.
The stock opened at ₹4,970.90, up ₹308.25 or 6.61% from the previous close, as of 9:19 AM on the National Stock Exchange (NSE). The approval comes just a day after the Cabinet gave the green light to the ₹3,300 crore project under the India Semiconductor Mission.
MS, a leading brokerage firm, has issued an Overweight call on Kaynes Technology with a target price of ₹3,845 per share, citing the positive impact of the government approval on the company’s growth prospects.
Key highlights:
– The Kaynes Semicon unit will have a production capacity of 60 lakh chips per day, catering to a wide range of applications including industrial, automotive, electric vehicles, consumer electronics, telecom, and mobile phones.
– The approval provides for 50% capital investment fiscal support under the modified scheme for setting up semiconductor fabs.
– The semiconductor mission has an outlay of ₹76,000 crore and aims to position India as a global hub for semiconductor manufacturing.
– Kaynes Semicon is the fifth company to receive approval for a semiconductor assembly and testing unit under the mission, after Micron, Tata Electronics, Tata Group-Powerchip Semiconductor, and CG Power.
– Together, these five projects are expected to bring in nearly ₹1.5 lakh crore in investments and have a combined production capacity of approximately 7 crore chips per day.
The government’s focus on promoting electronics manufacturing and the China+1 strategy adopted by corporations amid geopolitical tensions are expected to provide a boost to India’s semiconductor market, which is projected to grow at a 24% CAGR and reach a size of $150 billion by 2030.
Kaynes Technology, an electronics manufacturing services company, has been making strategic moves to capitalize on the growing semiconductor opportunity in India. The approval of its subsidiary’s ₹3,300 crore project is a significant milestone that is likely to drive further growth and investor confidence in the company.
The pending government approval for the semiconductor plant remained an area of investor concern in the past. However, with the Cabinet’s nod, the company can now move forward with its plans to set up the facility, which could generate incremental potential revenue for its OSAT (Outsourced Semiconductor Assembly and Test) venture, as indicated by the management earlier.
