Stocks in the Electronics Manufacturing Services (EMS) sector have delivered stellar returns this year so far, with some doubling investors' wealth, solidifying the sector as a hot pick among Dalal Street investors.
This surge in stock performance mirrors the rapid growth of the Indian EMS sector, which is emerging as a key manufacturing and export hub. The sector's expansion is driven by favourable government policies, including the Production-Linked Incentive (PLI) scheme and the Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS), coupled with India's cost competitiveness, robust infrastructure, and skilled labour force.
The momentum has been further accelerated by the “China+1” strategy, which is enhancing India's manufacturing capabilities on the global stage. According to recent estimates, the global electronics industry is projected to reach US$3.1 trillion by CY26, growing at a 4.9 per cent CAGR. The EMS sector is expected to outpace this growth, expanding at a 5.4 per cent CAGR to reach US$1.1 trillion.
India's share in the global EMS market is anticipated to quadruple by CY26, climbing to 7 per cent and reaching US$80.2 billion. This growth is fueled by a rapidly expanding domestic electronics market, which is projected to grow by approximately 25.5 per cent to US$282 billion, driven by both domestic and export demand, according to a recent report by Equirus Securities.
So far this year, shares of PG Electroplast have delivered 140 per cent return, soaring from ₹237.36 per share to ₹567. Dixon Technologies has also yielded a massive 96 per cent return to its shareholders.
Similarly, Kaynes Technologies has seen its shares surge from ₹2,600 to the current trading price of ₹5,019, resulting in a substantial 92 per cent increase. Other stocks in the sector, such as Elin Electronics and Amber Enterprises, have also posted gains of 49 per cent and 35 per cent, respectively, in the current year.
Domestic brokerage firm Systematix Institutional Equities said in its latest report that the 7 companies within its coverage universe saw significant growth, with a 77 per cent year-on-year rise in revenue, a 63 per cent increase in EBITDA, and a 75 per cent jump in PAT. These figures were 10–15 per cent higher than their estimates, driven primarily by strong performances from PG Electroplast (PGEL), Dixon Technologies, and Amber Enterprises.
The brokerage attributed this robust performance to strong demand for cooling products. Following this impressive first-quarter performance, companies remain optimistic about their growth prospects.
Meanwhile, Motilal Oswal has recently initiated coverage on Dixon Technologies with a 'buy' rating, setting a target price of ₹15,000 per share. The brokerage noted that Dixon has emerged as a rapidly growing, diversified player in the electronics manufacturing services (EMS) industry.
It also emphasized the company's consistent efforts to increase its market share across various segments through new technology partnerships and the addition of new clients.
Additionally, the brokerage has initiated coverage on Amber Enterprises with a 'buy' rating and set a target price of ₹5,000 per share. It highlighted Amber’s strategic diversification into the high-growth electronics market, particularly in PCB manufacturing, as well as the expanding scope of work in the mobility segment.
The brokerage believes that the company is poised to benefit from margin improvements. It expects the company’s evolution from Amber 1.0 (AC-focused) to Amber 2.0 (electronics) and Amber 3.0 (mobility) to reduce business cyclicality, leading to better asset turnover and improved return ratios following the initial years of capital expenditure.
Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.
