Shares of Kaynes Technology on Tuesday rallied 8.5% to its day’s high of Rs 5,052.25 after the firm said the Union Cabinet approved the proposal of Kaynes Semicon Private Limited, a wholly owned subsidiary of Kaynes Technology India to set up a semiconductor unit at Sanand, Gujarat.

The proposed unit will be set up with an estimated investment of Rs 3,307 crore. The capacity of this unit will be 60 lakh chips per day.

Market cap of the firm stood at Rs 30,964 crore. The stock has risen 143% in a year.

“The chips produced in this unit will cater to a wide variety of applications which include segments such as industrial, automotive, electric vehicles, consumer electronics, information technology telecom, mobile phones, etc,” said Kaynes Tech in a communication to bourses.

Kotak Institutional Equities has an add call on the stock with a price target of Rs 4,950. The brokerage said receiving approval to set up an OSAT facility paves way for the company to enter into semiconductor value chain.

“Its near-term focus will be to ramp up execution. However, over medium term, focus would be on shifting rev toward advance packaging solutions,” said Kotak.

Global brokerage Morgan Stanley is overweight on the stock with a price target of Rs 3,845. The government has cleared the company’s proposal to set up a semiconductor plant in Gujarat.

This is positive, as pending govt. approval remained an area of investor concern. The OSAT venture could garner incremental potential revenue of Rs 30-35 billion by F30 (asset turns of 1- 1.3x), said Morgan Stanley.

Kaynes Technology India is primarily engaged in design and manufacturing of advanced electronic modules and solutions catering to a wide range of industries.

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