Shares of electronic manufacturing companies (EMS) Dixon Technologies (India) Ltd, Kaynes Technology India Ltd, and Syrma SGS Technology Ltd rallied up to eight percent in trade after global broking firm JPMorgan initiated coverage with an 'overweight' rating on these stocks on Wednesday, July 9.
The brokerage believes that India's EMS space is a 'sunrise sector', and can continue to deliver strong growth. According to its projections, the sector can see a 32 percent revenue CAGR over FY25-30, as a result of the 'Make in India' thrust, rising electronics content, along with diversification of the global supply chain following the China+1 strategy.
JPMorgan has initiated coverage Syrma SGS Technology with an 'overweight' rating. The brokerage firm anticipates strong revenue momentum and improved profitability for Syrma, projecting a 31 percent compound annual growth rate (CAGR) in sales between FY25 and FY28.
EBITDA margins are expected to expand by 70 basis points to 9 percent by FY28, driven by robust demand in the industrial and automotive segments and easing margin pressures in the consumer electronics business. The brokerage also highlighted a likely recovery in exports from FY27, a trend it feels remains underappreciated by the market, offering potential for earnings upgrades.
Dixon Technologies, another top pick, was also assigned an 'overweight' rating. JPMorgan expects revenue to grow at a CAGR of 38 percent, supported by stable margins. The mobile phone manufacturing segment is seen as the main growth lever, with Dixon’s anchor client increasing order volumes and the Vivo joint venture ramping up from the fourth quarter of FY26.
The firm believes the mobile outsourcing opportunity could expand further, estimating a total market of 90 million outsourced units and an additional 50 million units currently produced in-house that may shift to EMS providers. This compares with Dixon’s internal goal of handling 60–65 million units by FY27.
Kaynes Technology, meanwhile, was projected to be the fastest-growing company in JPMorgan’s EMS universe, with an expected 46 percent revenue CAGR through FY28 and a $1 billion topline target by then. It too received an 'overweight' rating.
Amber Enterprises and Cyient DLM were both initiated at 'neutral', while Avalon Technologies was rated 'underweight'. JPMorgan noted that exports could emerge as a major structural growth theme for the sector, with Syrma, Cyient DLM, and Avalon well positioned to benefit over time.
Following a tripling of EMS stock prices over the last three years, JPMorgan cautioned that further gains will hinge on upward revisions in earnings estimates. Syrma and Dixon were named as the brokerage's top candidates for such potential upgrades.
At 12.50 p.m., shares of Syrma SGS Technology were quoting Rs 643.35, up 4.6 percent. Dixon Tech's stock was higher by two percent at Rs 15,786, while Kaynes Tech shares were quoting Rs 6,169.5, higher by 2.7 percent.
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