EMS Stocks Tumble Amid Profit-Taking Despite Strong Growth Outlook

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AuthorIshaan Verma|Published at:
EMS Stocks Tumble Amid Profit-Taking Despite Strong Growth Outlook
Overview

Shares of Kaynes Technology and Dixon Technologies fell up to 5.5% on Tuesday due to profit booking. This occurred despite brokerage Jefferies projecting a strong 44% CAGR in earnings per share for Indian EMS firms through FY28, driven by government PLI schemes and execution. Jefferies favors component manufacturers over OEMs and forecasts significant capex for key players.

Profit-Taking Dampens EMS Rally

Shares of electronics manufacturing services (EMS) companies Kaynes Technology India and Dixon Technologies (India) experienced a significant downturn on Tuesday, with declines reaching up to 5.5 percent. This profit-booking trend emerged despite a robust growth projection for the Indian EMS sector through fiscal year 2028 from brokerage firm Jefferies.

Kaynes Technology closed 5.37 percent lower on the National Stock Exchange (NSE) at ₹3,783, while Dixon Technologies settled 3.11 percent down at ₹11,676. Amber Enterprises India remained largely flat, and Syrma SGS Technology saw a marginal gain of 0.25 percent, closing at ₹752.10.

Jefferies Forecasts Sectoral Growth

Jefferies maintained an optimistic view, forecasting that Indian EMS players will achieve a compound annual growth rate (CAGR) of 44 percent in earnings per share (EPS) between FY25 and FY28. This forecast is underpinned by strong execution capabilities and supportive government policies.

The brokerage highlighted the success of the government's Production-Linked Incentive (PLI) scheme for components in bolstering sector growth. Jefferies expressed a preference for Indian component manufacturers over original equipment manufacturers (OEMs) for 2026. Furthermore, the firm estimates a combined capital expenditure of approximately ₹100 billion for Amber Enterprises, Syrma SGS Technology, Kaynes Technology India, and Dixon Technologies between FY26 and FY28. They anticipate a return on capital employed (RoCE) in the 15-17 percent range for these companies.

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