India’s electronics manufacturing services (EMS) industry is still at an early stage of global penetration, with a market share of around 4-5 per cent, but is emerging as a key pillar of the electronics ecosystem, backed by strong growth momentum and multiple long-term tailwinds, according to a report by HDFC Securities.
“Key drivers include PLI incentives, China+1-led supply-chain diversification, rising domestic electronics demand, increasing labour costs in competing regions, and a growing preference among global OEMs for outsourced manufacturing,” the brokerage said in its note.
While India’s electronics manufacturing base has expanded steadily, reliance on imported components remains a key challenge, it added. However, to address this issue, the government has introduced initiatives such as the Electronics Component Manufacturing Scheme and the Semiconductor Mission to boost investments, deepen domestic value addition, and enhance global competitiveness.
According to HDFC, as backward integration gains momentum, the EMS sector is well-positioned for faster growth, supported by improving cost efficiencies and a structurally rising export share. The brokerage sees Syrma SGS as its top pick in the sector. It has assigned a ‘Buy’ rating on the stock with a target price of ₹920.
India’s EMS industry poised for strong growth
Analysts believe that the EMS industry is a key component of India’s broader electronics ecosystem and has shown strong growth in recent years. The sector recorded a 24 per cent revenue CAGR over FY19–24, with momentum expected to further accelerate to 27 per cent CAGR over FY24–29E. This growth is being supported by multiple structural tailwinds, including government incentive schemes, global OEMs adopting a China+1 strategy to diversify supply chains, rapid expansion in domestic electronics demand, rising labour costs in competing regions, and an increasing preference among large OEMs to outsource manufacturing.
Export-led structural growth tailwind
India’s EMS sector is benefiting from a strong export-led structural tailwind, supported by a sustained rise in electronics exports over the past decade. Electronics have moved from the seventh-largest export category in FY22 to the third in FY25, and further to second place in H1FY26. Export value has grown nearly nine-fold from ₹0.4 trillion in FY15 to ₹3.3 trillion in FY25, reflecting a robust 24 per cent CAGR, the brokerage said in its note.
Analysts noted that this export momentum, backed by PLI incentives, global supply-chain shifts, and increasing OEM outsourcing, provides a strong long-term growth runway for EMS players.
Under its coverage in the sector, the brokerage has assigned an ‘Add’ rating to Dixon Technologies with a target price of ₹10,740 per share. It expects the company to post FY26–28E revenue, Ebitda, and APAT CAGRs of 25 per cent, 26 per cent, and 26 per cent, respectively.
It has given a ‘Reduce’ rating to Kaynes Technology with a target price of ₹3,810 per share, projecting FY25–28E revenue, Ebitda, and APAT CAGRs of 40 per cent, 44 per cent, and 32 per cent, respectively.
Amber Enterprises was assigned a ‘Buy’ rating with a target price of ₹8,300 per share. The company is expected to post FY25–28E revenue, Ebitda, and APAT CAGRs of 24 per cent, 28 per cent, and 38 per cent, respectively.
Syrma SGS Technology is expected to report FY26–28E revenue, Ebitda, and APAT CAGRs of 29 per cent, 38 per cent, and 44 per cent.
However, HDFC Securities sees potential changes or delays in incentive schemes, continued dependence on imported components, lower scale and cost competitiveness versus peers like China and Vietnam, and delays in scaling up domestic component manufacturing among key risks for the sector.
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