Kaynes Tech (KAYNES)

FairStock Score: 45/100 — MIXED

Score breakdown: P/E: 0/3 · ROCE: 1/2 · Growth: 2/2 · Dividend: 0/1

Key Financials

Strengths

• Revenue growth 50.98% and profit growth 60.34%, with a 5-year revenue CAGR of 45.32%, showing strong momentum
• Low leverage with debt/equity of 0.19 and healthy Altman Z-Score of 5.06, indicating financial stability
• Piotroski F-Score of 7/9 suggests good fundamental health across profitability, leverage, and efficiency
• Promoter holding of 53.46% aligns majority shareholders with minority investors
• Latest quarter net margin of about 9.6% (₹77 crore profit on ₹804 crore sales) shows reasonable profitability

Concerns

• Extreme valuation: P/E of 66.22, P/B of 10.35, and EV/EBITDA of 17.03, with price far above Graham Number of ₹810.87 and negative margin of safety of -375.60%
• Free cash flow is negative at ₹-437 crore, so accounting profits are not converting into cash
• No dividend yield at 0.00%, leaving small shareholders dependent entirely on capital gains
• FairStock Score of 41/100 (MIXED) signals that despite growth, there are notable weaknesses

AI Analysis

As a value investor, I begin with price versus value. At ₹4,385.70, with a Graham Number of ₹810.87, I have essentially no margin of safety—negative 375.60%. Buying here means paying ₹66 for every ₹1 of earnings, and over 10 times book. The market is pricing in perfection. Kaynes is growing fast: 5-year revenue CAGR 45.32%, latest sales growth 50.98%, and profit growth 60.34%. That is exciting, but growth at any price is not my game. The balance sheet is respectable: debt/equity 0.19, ROE 13.69%, ROCE 14.28%, Altman Z-Score 5.06, and Piotroski F-Score 7/9. Yet free cash flow is minus ₹437 crore. Profits are not turning into cash, and with a dividend yield of zero, shareholders must rely entirely on price appreciation. Promoter holding at 53.46% is aligned, but the high valuation leaves no cushion. I would call this a fast grower, not a stalwart: the moat is not yet proven in the numbers. The company earns about 14% on capital, which is decent but not extraordinary. The latest quarter sales were ₹804 crore with net profit of ₹77 crore, giving a net margin of roughly 9.6%. Fine, but not a franchise. I would wait for a price closer to intrinsic value, or for evidence that growth can continue while generating cash. In the meantime, this is a wonderful growth story offered at a very rich price. The margin of safety is absent. As Graham said, price is what you pay, value is what you get. At current levels, I get very little protection.

Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer