The recent underperformance of Dixon Technologies and Kaynes Technology has cast a shadow over India’s EMS space, raising questions around whether the sector’s high-growth phase is behind it. Both stocks have lagged meaningfully in recent months-down sharply versus the broader market-disrupting what was, until recently, a widely favoured investment theme.But according to JPMorgan, this divergence is less about structural fatigue and more about a transition underway within the sector.
The brokerage points out that none of the key EMS names have actually outperformed the market recently, reinforcing the perception that momentum has faded. However, it pushes back on the idea that the growth story is over. Instead, what’s unfolding is a gradual pivot-from finished goods (FG) assembly to higher-value component and PCB manufacturing. This shift, while still in its early stages, is expected to reshape earnings quality and margin profiles across the sector.
Companies such as Amber Enterprises and Cyient DLM have been upgraded, reflecting growing confidence in their positioning within this evolving opportunity.
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Syrma Stays Ahead Of The Pack
Within this shifting landscape, Syrma continues to stand out as the preferred play. Its ongoing investments in multi-layer PCB manufacturing, relatively lower dependence on regulatory approvals, and exposure across industrial, automotive, and consumer segments position it as a more stable bet.
JPMorgan’s pecking order reflects this tilt: Syrma leads, followed by Dixon, Amber, Kaynes, Cyient DLM, and Avalon.
The past four months have been difficult for EMS stocks, with declines ranging from 8% to as much as 35%. Much of this weakness has been attributed to disappointment in erstwhile leaders like Dixon and Kaynes, which had previously anchored investor expectations.
Early Signs Of A Reset
However, there are signs that the narrative is beginning to rebalance. Stocks such as Syrma SGS Technology, Amber, and Avalon Technologies have started to outperform modestly on a year-to-date basis, suggesting that markets are rewarding companies better aligned with the next phase of growth.
JPMorgan also sees evidence of a bottoming-out, noting that none of the stocks are currently underperforming on a YTD basis.
Looking ahead, the brokerage expects most EMS companies-excluding Dixon-to deliver over 20% revenue growth through FY26-28. The confidence stems from visible project pipelines, government support for component manufacturing, and approvals already secured by several players for expansion into bare PCB and component segments.
That said, valuations remain a sticking point. Even after the correction, multiples for some companies still factor in strong execution, leaving limited room for earnings misses.
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