JPMorgan sees EMS as 'sunrise sector'; Syrma, Dixon, Kaynes lead the pack

Business Standard

10-07-2025

India's electronic manufacturing services (EMS) space is emerging as a key 'sunrise sector' that enjoys a strong growth led by various tailwinds, JPMorgan said, initiating coverage in various companies.
The global brokerage began coverage on Syrma SGS Technology (target: ₹800) and Dixon Technologies (target: ₹17,700), and Kaynes Technologies (target: ₹7,150) with an 'overweight' rating. JPMorgan initiated a 'neutral' rating on Amber Enterprises (target: ₹7,350) and Cyient DLM (target: ₹450), and a 'underweight rating' on Avalon Technologies (target: ₹650).
The EMS sector is expected to sustain its strong growth trajectory, with revenue projected to grow at a compound annual growth rate (CAGR) of 32 per cent over the financial year 2025-30. According to estimates by JP Morgan, EMS is set to expand its share in domestic electronics production to 41 per cent by FY30 from 31 per cent in FY25.
The growth will be supported by rising electronics content in products, the government's 'Make in India' initiative aimed at import substitution, and a global supply chain shift towards India under the China+1 strategy, it said in a report on July 8.
Additionally, two emerging areas, outsourced semiconductor assembly and testing (OSAT) and printed circuit boards (PCBs), offer fresh growth opportunities, JPMorgan added. Exports are also expected to become a key growth driver in the coming years.
JPMorgan's take on EMS stocks
Syrma SGS Technology: The brokerage expects Syrma to deliver the third-fastest revenue growth in its EMS coverage, projecting a 31 per cent compound annual growth rate (CAGR) over FY25-28. Ebitda margins are expected to expand by 70 basis points to 9 per cent by FY28, driven by strong demand in the industrial and automotive segments. The brokerage also expects exports to stage a comeback from FY27, which could further support growth and margins.
While the market appears to have priced in strong mobile growth through FY27, JPMorgan sees further upside from non-mobile segments.
Kaynes Technology: The company is expected to clock the fastest revenue growth in JPMorgan's EMS coverage, at 46 per cent CAGR over FY25-28, achieving its $1 billion revenue target by FY28. Growth is likely to be supported by new contributions from outsourced semiconductor assembly and testing (OSAT) and printed circuit boards (PCB) beginning FY27. The brokerage believes that delivering near-term growth could trigger a re-rating.
Amber, Cyient DLM, and Avalon: The brokerage expressed scepticism over Amber's growth potential due to a shift from air-conditioner assembly to component manufacturing, driven by brand insourcing. Cyient DLM is seen facing growth challenges in FY26 due to a weak order book and a lack of revenue from Bharat Electronics, JPMorgan said. For Avalon, its high export exposure, 57 per cent of revenues, is seen as a risk amid global tariff uncertainties, likely pressuring FY26 performance.
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