High Growth Frontier in Electronics Manufacturing Services Sector in India
Electronics Manufacturing Services Sector – In 2024, companies like Amber Enterprises, Kaynes Technology, and Dixon Technologies in the electronics manufacturing services (EMS) sector in India saw huge returns, with stocks surging between 135% and 180%. This sector outperformed the NSE Midcap index by a long shot. Looking ahead to 2025, Jefferies is optimistic about the sector, especially companies focusing on backward integration and high-margin components, with Amber Enterprises as their top choice.
Market Potential
India’s push for self-reliance in electronics manufacturing lines up with global trends like the China+1 strategy and the country’s competitive labor costs. With electronics making up 14% of India’s imports and a per capita consumption of just $78 (much lower than the global average of $324), there is a lot of room for growth in the market, according to Jefferies.
Factors Driving Growth
Jefferies predicts a compound annual growth rate of over 30% for the EMS industry from FY24 to FY26, fueled by government initiatives like Production Linked Incentives, increasing demand for high-tech components like PCBs and semiconductors, and investments in domestic innovation, such as Amber’s component ecosystem and Kaynes’ semiconductor ventures.
Top Picks
Amber Enterprises
Jefferies sees Amber Enterprises as a standout in the sector due to its strong position in margin-accretive components. The company is even considering an IPO for its electronics division, which contributed 19% of sales in the first half of fiscal 2025 with a healthy operating margin.
Kaynes Technology
Kaynes’ focus on semiconductors, PCBs, and outsourced semiconductor assembly and test sets it up for long-term growth, according to Jefferies. However, the firm rates Kaynes as a hold due to high valuations.
Dixon Technologies
With a majority of revenue coming from original equipment manufacturing, Dixon’s low-margin profile keeps it underperforming, says Jefferies. The brokerage notes that Dixon’s mobile-focused PLI benefits will expire in a few years, limiting growth potential.
Syrma SGS
Syrma’s growth strategy in electronics components and alignment with government policies also align with Jefferies’ positive outlook.
Amber and Kaynes are leading the way in diversification, with Amber’s electronics division expected to bring even more value. However, risks like a slowdown in demand, losing customers, and supply chain issues could dampen the optimism in the sector.
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Disclaimer: This blog post is for informational purposes only and should not be considered financial advice. Investors should conduct thorough research and consult with a qualified financial advisor before making any investment decisions.