Amber Enterprises, Kaynes Tech, other EMS stocks in focus as Centre approves electronic component manufacturing PLI scheme

Jefferies noted that the government's focus on backward integration and value addition will double electronics manufacturing going ahead.

Shares of electronic manufacturing players will be in focus on April 1, after the  Union Cabinet on March 28 approved a production-linked incentive scheme for passive or non-semiconductor electronics components.

The PLI scheme will have an outlay of Rs 22,919 crore, Union Electronics and IT Minister Ashwini Vaishnaw said. It is the first scheme that focuses on promoting the manufacturing of passive electronic components.

The minister said that the scheme will create direct employment for 91,600 people and attract investment of around Rs 59,350 crore. "Passive components are approved under the Electronics Component PLI scheme. It has a total package of Rs 22,919 crore. This will be over six years," Vaishnaw said.

International brokerage Jefferies said that the government's focus on backward integration and value addition will double electronics manufacturing. The brokerage maintained its buy rating on Amber Enterprises and Kaynes Tech, while noting that Dixon Technologies faces margin pressure as a result of its low-margin OEM mix.

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Further, the minister said that that segment will serve the requirements of several sectors, including telecom, consumer electronics, automobile, medical devices, power sector, and more. He said that the scheme is expected to lead to production of Rs 4.56 lakh crore.

"India has started developing capital goods, machine goods used to make electronic products. Major centres have come up in Pune, Coimbatore, Rajkot, Bangalore. Apple today has 64 suppliers in India," said Vaishnaw.

According to electronics component makers body Elcina, non-semiconductor components production in India was around $13 billion in 2022 which is projected to reach around $20.7 billion by 2026 and around $37 billion by 2030 if the business continues as usual thereby leading a deficit of $248 billion in the segment in the next six years. The deficit is met through imports.

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