Dixon Tech, PGEL, Amber, Kaynes: Axis Capital shares target prices as India's manufacturing surge

Domestic brokerage firm Axis Capital continues to remain positive on electronics manufacturing services (EMS) sector in India, which is positioning itself as a leading global manufacturing and export hub, spurred by strategic government policies and significant investment in infrastructure.

With the corporate tax rate for new manufacturing units reduced to just 15 per cent, the nation is becoming an appealing choice in the global supply chain, said the brokerage firm. Key sectors like mobile and RAC manufacturing, along with PCB assembly, are witnessing rapid growth.
 

In mobile phone production, India has emerged as the second-largest producer, manufacturing nearly 99 per cent of the phones sold domestically. Exports have increased 77 times over the past decade, reflecting India's growing capability in this sector. The focus now is on enhancing value addition, which is anticipated to rise from the current 15-16 per cent to 40-50 per cent, supported by a new components policy, noted Axis.

The RAC manufacturing sector has also seen significant advancements. Complete Built-Up Unit (CBU) imports have decreased from 35 per cent to 5 per cent from FY19 to FY25. This has driven value addition from 30 per cent to 70 per cent, with expectations to reach 90 per cent by FY27. The local production of compressors, copper tubes, and aluminium coils is central to this growth, said the brokerage firm.

PCB assembly in India has grown substantially due to increased import duties. Mobile PCBA imports fell dramatically from nearly Rs 3,000 crore in FY18 to nearly zero by FY24. The introduction of a components policy is expected to bolster local manufacturing of PCBs and other passive components.

Several companies stand to benefit from this manufacturing boom. Kaynes, PG Electroplast, Avalon, Amber, and Dixon are poised to gain from the next phase of component manufacturing. These firms are positioned to capitalise on the increasing demand for locally produced components, said Axis.
 

Axis Capital has initiated coverage on PG Electroplast and Amber Enterprises with 'buy' rating with target prices (TP) of Rs 1,021 and Rs 7,088, respectively. It has also assumed coverage on Kaynes Technologies (TP: Rs 5,368) and Syrma SGS Technology  (TP: Rs 535). It has given 'add' rating on Avalon Technologies (TP: Rs 848), Dixon Technologies (TP: Rs 14,401) and Cyient DLM (TP: Rs 459).