Shares of two Indian electronics‑manufacturing companies dropped sharply on Tuesday, even though a major broker remains upbeat about the sector’s future.
Market Reaction
Kaynes Technology fell 5.37% to close at ₹3,783, while Dixon Technologies slipped 3.11% to finish at ₹11,676 on the NSE. Other EMS players were steadier: Amber Enterprises ended flat at ₹6,710, and Syrma SGS edged up 0.25% to ₹752.10.
Jefferies' Positive Outlook
Despite the sell‑off, Jefferies expects Indian EMS firms to post strong earnings growth. The brokerage projects a 44% compound annual growth rate (CAGR) in earnings per share from FY25 to FY28, driven by better execution and supportive policies.
Growth Drivers and Capital Spending
- The government’s Production‑Linked Incentive (PLI) scheme for components is helping the segment expand.
- Jefferies believes Indian component makers will outperform original equipment manufacturers by 2026.
- Combined capital expenditure for Amber Enterprises, Syrma SGS, Kaynes, and Dixon is estimated at about ₹100 billion between FY26 and FY28, with expected returns on capital employed of 15‑17%.
What Investors Should Note
The recent dip looks like short‑term profit booking rather than a sign of weakening fundamentals. If the sector’s earnings grow as forecast, these companies could offer solid returns over the next few years.
Remember, this is perspective, not a prediction. Do your own research and consider talking to a certified financial advisor before making any investment decisions.