Driven by government initiatives like the production-linked incentive (PLI) scheme, the electronics manufacturing services (EMS) sector is likely to grow to Rs 6 lakh crore in FY27 from Rs 1.46 lakh crore in FY22, and do well in the short to medium term, according to research reports.
Electronics Manufacturing Services (EMS) refers to companies that specialize in the design, manufacturing, testing, distribution, and repair of electronic components and assemblies. These services are primarily provided to Original Equipment Manufacturers (OEMs), enabling them to focus on research, development, marketing, and sales while outsourcing the manufacturing process.
Key EMS Players with 35 to 50 percent CAGR over the next three to five years:
Even though there are increasing trade tensions and the possibility of new reciprocal tariffs by the US, EMS leaders believe that India remains competitive amid concerns about the country’s exports.
1. Kaynes Technology Ltd
The shares of Kaynes Technology Ltd, with a total market capitalization of Rs 31,227.65 Crore on Friday, closed at Rs 4,878.50 per share, which was 5.07 percent higher than the previous closing price of Rs 4,642.9. The shares generated an impressive return of 527 percent in the past three years.
CFO of Kaynes Technology, Jairam Sampath said “We are looking at 40-50 percent CAGR on revenues without any dilution of margins,” as per CNBCTV18. He added that the company needs improvement in RoCE which would become possible by improving working capital and networking capital. The CFO stated that the additional sectors that they have entered, like semiconductor assembly and PCB manufacturing will be value-accretive, and in the next two to three years will start contributing to revenue and profitability.
Beyond FY28, the company aims to reach $1 billion, a significant milestone. While current growth is driven by domestic demand and government policies, it is also exploring new markets to ensure continued growth and prepare for potential geopolitical changes.
The CFO also stated that the company’s order inflows have been increasing at a rate of 25 to 30 percent per quarter. He also mentioned that the company is seeing growth in the smart meter segment and is expecting a strong Q4 supported by smart meters.
The CFO is also optimistic that the revenue will cross Rs 2,800 Crore and will have an EBITDA of 15 percent by the end of FY25. The company reported an increase in revenue from operations of 29.8 percent, from Rs 509 Crores in Q3FY24 to Rs 661 Crores in Q3FY25. Similarly, its Net Profits grew by 47 percent from Rs 45 Crores to Rs 66 Crores over the same period.
Kaynes Technology Ltd is an integrated electronics manufacturer offering end-to-end solutions enabled by the Internet of Things (IoT). The company provides services ranging from conceptual design and process engineering to integrated manufacturing and lifecycle support for leading players in sectors such as automotive, industrial, aerospace and defense, space, nuclear, and more.
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2. Dixon Technologies Ltd
The shares of Dixon Technologies Ltd, with a total market capitalization of Rs 84,263.52 Crore on Friday, closed at Rs 14,025.40 per share, which was 0.9 percent higher than the previous closing price of Rs 13,906. The shares generated an impressive return of 212 percent in the past three years and a stellar return of 2,095 percent return in the past five years.
The CFO of Dixon Technologies Ltd showed his optimism stating that the company will grow at a CAGR of 35 to 40 percent in the next three to four years. He added that with their largest growing businesses in mobiles and IT hardware, the company will see significant cash flow generation. As these businesses have high asset turns, with the help of backward integration, it will have a positive impact on RoCE and RoAs.
India’s exports to the US are currently $11 billion and are expected to grow in 2024-25. However, India’s share of electronic exports to the US is only 2-3 percent, much lower than China’s 35 percent and Mexico’s 22 percent, indicating that China and Mexico dominate US electronic imports. Despite the US tariffs, the CFO believes that India is competitively positioned.
The company reported an increase in revenue from operations of 117 percent, from Rs 4,818 Crores in Q3FY24 to Rs 10,454 Crores in Q3FY25. Similarly, its Net Profits grew by 78 percent from Rs 97 Crores to Rs 216 Crores over the same period.
Dixon Technologies Ltd is an electronic manufacturing services provider offering manufacturing and design solutions for consumer durables, home appliances, lighting, mobile phones, security devices, set-top boxes, wearables, and medical equipment. The company caters to global customers and also specializes in the repair and refurbishment of LED TV panels.
Written By Adhvaitha Nayani
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