Nomura has reiterated its 'Buy' rating on Dixon Technologies and Samvardhana Motherson International (SAMIL) after the government launched a ₹62,500 crore Mobile Phone Manufacturing Scheme (MPMS). The brokerage believes these firms are well-positioned to benefit from incentives aimed at boosting local production. Investors should note that the final impact depends on execution, demand, and strict government criteria.
Nomura has maintained a positive outlook on Dixon Technologies and Samvardhana Motherson International (SAMIL), reiterating its 'Buy' ratings for both. The brokerage views these companies as primary beneficiaries of the Indian government’s newly notified Mobile Phone Manufacturing Scheme (MPMS), which aims to scale up the country's electronics manufacturing capabilities.
The MPMS, which covers the period from the 2026-27 to 2030-31 financial years, has been allocated a total outlay of ₹62,500 crore. This policy provides financial incentives to manufacturers based on their incremental sales and production growth. The scheme is structured to offer payouts ranging from 2.25% to 5% on increased production, with extra incentives of up to 1.5% for local component sourcing and 3% for design and research activities. This initiative is part of the government's effort to attract global supply chains and increase domestic value addition.
Dixon Technologies and Scaling Growth
Dixon Technologies is highlighted for its significant scale and focus on local manufacturing. With projected smartphone revenue reaching approximately ₹34,000 crore for FY26, the company has established a strong position in the electronics manufacturing services (EMS) sector. Dixon works with major global brands, including Samsung and Google. Analysts believe the company is well-placed to capture more market share if brands like Motorola and Transsion shift more of their production capacity to India to take advantage of the local manufacturing ecosystem.
SAMIL and the Ecosystem Play
SAMIL is seen as a crucial player in the broader development of India’s electronics component ecosystem. As global phone brands expand their footprint in India, the demand for locally produced parts increases. SAMIL’s role in supplying these critical components makes it a potential beneficiary of the industry-wide growth supported by the new government scheme.
Risks and Execution Factors
While the government support is a positive signal, investors should remain aware of potential risks. The actual financial gain for these companies is not guaranteed; it will depend on meeting strict eligibility and compliance criteria set by the government. The electronics sector in India is also highly competitive, which can put pressure on profit margins if manufacturers cannot maintain cost efficiency. Furthermore, the benefits from these incentives might be shared with brand partners, meaning the impact on the company’s bottom line may not be as high as the headline incentive rates suggest. Demand for smartphones is also subject to global economic conditions, which can fluctuate.
The most important monitorables for investors will be management commentary regarding the actual realization of these incentives and whether they can successfully scale their operations. Shareholders should track the companies' quarterly performance to see if the new scheme leads to improved margins or higher revenue growth in the coming periods.