India's EMS sector is set for 21% YoY revenue growth in Q1 FY27, fueled by strong consumer and industrial demand. A Kotak report highlights margin pressures but maintains a positive outlook, citing government policies and manufacturing activity.
EMS Sector to Post Strong Q1 FY27 Growth
India's electronic manufacturing services (EMS) sector is likely to post 21 per cent year-on-year revenue growth in the first quarter of FY27, driven by healthy demand across consumer and industrial segments, according to a Kotak Institutional Equities report. The report said margins are expected to remain under pressure due to higher raw material costs and changes in product mix. It said the sector's outlook remains positive, supported by rising electronics manufacturing activity and expected policy measures, including the proposed Mobile PLI 2.0 and ISM 2.0 schemes. However, the report noted that the benefits would depend on the final design and implementation of these schemes .
"We expect a steady 1QFY27 for our EMS coverage, with revenue and EBITDA projected to grow 21 per cent year-on-year and 18 per cent year-on-year, respectively, as healthy topline growth is partly offset by margin pressures," the report said.
Company-Specific Performance
Consumer-Focused Segment
Among consumer-focused EMS companies, Kotak expects Dixon Technologies to report the strongest performance, with revenue increasing 43 per cent quarter-on-quarter, led by strong demand in its mobile and consumer electronics businesses. On Thursday, Dixon Technologies announced a JV with Vivo to manufacture smartphones in India. Amber Enterprises is also expected to post around 25 per cent year-on-year revenue growth, supported by its consumer durables, electronics and railway businesses.
The report, however, said profitability at Dixon Technologies and Amber Enterprises is likely to remain under pressure due to the absence of Mobile PLI benefits for Dixon and higher raw material costs for Amber.
Business-to-Business Segment
In the business-to-business EMS segment, Kotak expects healthy growth across companies. Syrma SGS Technology, Avalon Technologies and Cyient DLM are likely to benefit from improved operating leverage and margin expansion.
Positive Outlook Maintained
Kotak maintained a positive outlook on the EMS sector, citing sustained demand, better execution and supportive government policies as key drivers for strengthening India's electronics manufacturing ecosystem. (ANI)
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