Kaynes Technology: PAT up 106% & Revenue up 70% in Q1-25 at a PE of 141
Guidance for 60% revenue & 70% EBITDA growth in FY25. Strong Q1-25 inline with FY25 guidance. Order book 1.7X FY25 expected revenue to support FY25 guidance. FY24-29 outlook for 60% revenue CAGR
2. FY21-24: PAT CAGR of 166% & Revenue CAGR of 62%
3. Strong FY24: PAT up 93% & Revenue up 60%
4. Strong Q1-25: PAT up 106% & Revenue up 70%
5. Business metrics: Strong return ratios
Q1-25:
8. Outlook: 71% EBITDA & 60% revenue growth in FY25
i. FY25: Revenue growth of 60%
For the year 2025, we expect to clock a similar rate of growth in revenue greater than 60% and an improvement in operational EBITDA margin of more than 100 basis points.
ii. FY25: EBITDA growth of 71%
FY24 EBITDA margin of 14.1% expanding to 15.1% in FY25 on revenue growth of 60%, implies an EBITDA growth of 71%
improvement in operational EBITDA margin of more than 100 basis points.
iii. Strong revenue visibility: Order book 1.7X revenue expected for FY25
Revenue growth of 60% implies a expected revenue of Rs 2,888 cr in FY25. This implies that the order book of Rs 5,038.6 cr is 1.7X FY25 expected revenue.
iv. FY24-29: Long term revenue CAGR of 60%
KAYNES management is indicating towards for a longer term revenue CAGR of 60% for FY24-29 as a continuation of the historic momentum with the revenue CAGR of 60%
9. PAT growth of 106% & Revenue growth of 70% in Q1-25 at a PE of 141
10. So Wait and Watch
If I hold the stock then one may continue holding on to KAYNES
KAYNES has delivered a strong multi-year performance. On the back of this strong performance it is also guiding for a strong FY25, followed by a strong outlook for F24-29. One can continue riding the strong business uptrend which KAYNES is delivering.
In the short term the Q1-25 top-line and bottom-line performance is in line with the 60%+ revenue growth guidance
One needs to keep a watch on the margins. At a PE of 141 a margin contraction cannot be sustained for long. While KAYNES management is guiding for a margin expansion in FY25, Q1-25 has delivered a contraction in margin.
11. Join the ride
If I am looking to enter KAYNES then
KAYNES has delivered PAT growth of 106% & Revenue growth of 70% in Q1-25 at a PE of 141 which makes the valuations quite expensive in the short term.
With a FY25 guidance of 60% revenue growth and 70% EBITDA growth at PE of 141, the valuations look fully priced from a FY25 perspective.
The opportunity will emerge over the longer term if the momentum of FY20-24 is sustained into to FY24-29. KAYNES management is quite confident on delivering on the FY24-29 outlook but 5 years is a long time and there may be volatility along the way.
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