'Avoid bottom fishing', JPMorgan's advice on Kaynes Tech, even as it remains 'overweight'
JPMorgan says that the stock has been on a downward trajectory after its second quarter results and it is difficult to predict when the stock will make a bottom given that neither the fundamentals nor the guidance have changed but sentiment is driving the stock down.
Kaynes Tech shares fell on Thursday after brokerage firm Kotak Institutional Equities raised some concerns with regards to the company, to which Kaynes has issued a detailed response to the exchanges.
By Hormaz Fatakia
Brokerage firm JPMorgan has recommended investors to avoid "bottom fishing" in shares of Kaynes Technologies Ltd., as it does not see a clear, strong catalyst for the stock till it reports its third quarter results.
The recommendation comes even as JPMorgan continues to remain "overweight" on the stock with a price target of ₹7,550. The price target implies a potential upside of 52% from current levels.
JPMorgan wrote in its note that shares of Kaynes are now down 25% in the last one month. In fact, the stock has gained in only five out of the last 25 sessions put together.
Kaynes is now facing balance sheet and cash flow concerns with question marks on cash flow concerns and question marks on revenue growth as well as ex-smart meters, according to JPMorgan, who added that investor feedback indicates that the company needs to show improvement in its cash flow.
The brokerage said that the stock has been on a downward trajectory after its second quarter results and it is difficult to predict when the stock will make a bottom given that neither the fundamentals nor the guidance have changed but sentiment is driving the stock down.
Kaynes Tech shares fell on Thursday after brokerage firm Kotak Institutional Equities raised some concerns with regards to the company, to which Kaynes has issued a detailed response to the exchanges.
Out of the 26 analysts that have coverage on Kaynes, 14 of them have a "buy" rating, eight say "hold", while four have a "sell" rating.
Shares of Kaynes Technologies ended 6.3% lower on Thursday at ₹4,971.5. The stock is down 36% from its 52-week high of ₹7,822.
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