Scaling up the smart meter business amid growing market demand
Kaynes Technologies (KAYNES) is rapidly scaling up its smart meter business to tap the huge 250m (INR750b) smart meter market over the next few years. The company has recently inaugurated its electronics manufacturing facility in Hyderabad for the production of smart meters, and has acquired its client Iskraemeco.
Smart meters are gaining momentum due to India’s RDSS scheme, which aims to replace 250m conventional meters by CY25. As of Sep’24, only 14.5m meters have been installed, but the installation rates are projected to rise, presenting a substantial INR632.8b opportunity for Advanced Metering Infrastructure Service Providers (AMISPs) and System Integrators (SIs).
While KAYNES already manufactures smart meters for clients such as Iskraemeco and L&T from its Mysore facility, it has recently opened a large Hyderabad plant with a capacity of 4m meters annually. The company has also acquired Iskraemeco India (AMISPs/SI) for INR492.86m, enhancing its manufacturing and customer service capabilities. This acquisition enables KAYNES to offer installation and after-sales services while expanding into smart meters for other utilities (gas or water).
KAYNES has launched a fully automated facility in Hyderabad, producing 3,000 smart meters daily (4m meters p.a.). The company’s plans to add another building next year thereby increasing the capacity to 10m meters annually, supporting future expansions.
Valuation and view
KAYNES is a prominent end-to-end and IoT-enabled integrated electronics manufacturer with strong order book growth (85% CAGR over FY20-FY24) and a higher share of Box Build (~42% in FY24) and PCBA (~55%).
We estimate a revenue/EBITDA/Adj. PAT CAGR of 57%/64%/71% over FY24- FY27, driven by a healthy order book growth trajectory and a better margin profile (increasing mix of high-value orders).
We reiterate our BUY rating on the stock with a TP of INR6,400 (premised on 60x Jun’26E EPS).
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