The EMS or electronics manufacturing sector is set to see smart gains following the India-US trade deal, noted international brokerage JPMorgan, as the announcement clears up questions around the exports potential over the medium to long term.
In the near term, this should be positive for Cyient DLM, Avalon Technologies and Syrma SGS as it removes the uncertainty that was forcing customers to be in wait-and-watch mode. "In the medium to long term, this should be positive for the entire EMS sector, given every company is planning to tap exports as the next frontier of growth and the valuations also bake in an exports scale-up at some point over the next 5-10 years," added the brokerage.
The international broking house also said that Cyient DLM and Avalon should benefit in the near-term as client uncertainty regarding tariffs goes away, thereby helping growth acceleration. Syrma SGS can pursue its exports opportunity that it had kept on hold, while Dixon Tech can see mobile exports opportunity open up in a big way. Further, Kaynes’ OSAT business should benefit due to exports clients; while it should be a neutral event for Amber.
Cyient DLM's 87% of revenue derived from exports. The biggest beneficiary of the trade deal. It highlighted in the 3Q earnings call that it was facing customer-specific issues emerging from tariff-related uncertainty that led clients to be in wait-and-watch mode to see how the tariff situation evolves. The trade deal announcement should remove that uncertainty and drive growth acceleration.
Avalon Technologies's 60% of revenue derived from exports. The second biggest beneficiary of the deal, in JPMorgan's view. Its FY26 revenue guidance of 28-30% was conservative in nature as it implied only 16-17% growth in 2H which seemed low given the order book has been growing at 25%. The conservatism had come from the uncertainty around the trade deal, and with that out of the way we believe Avalon will upgrade its revenue guide when it reports earnings on 5th Feb.
Syrma SGS Technology derives about 25% of its revenue from exports and remains a top pick, offering balanced exposure to both domestic demand and overseas markets. The trade deal removes tariff uncertainty, clearing the path for Syrma to accelerate its export strategy.
Dixon Technologies earns around 12% of its revenue from exports. The deal improves visibility on export opportunities in mobile manufacturing, addressing investor concerns around the scalability of its already high domestic market share and opening up a new growth driver.
Kaynes Tech has limited export exposure at about 4% of revenue, but the deal is positive for its OSAT business, which is expected to cater to export clients. Concerns around exporting semiconductor chips to the US under steep tariffs should now ease.
Amber Enterprises derives roughly 1% of its revenue from exports, making the development largely neutral in the near term. However, the easing of tariffs is a medium-term positive as the company looks to gradually scale up its export footprint.
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