Syrma SGS, Dixon, Kaynes, Avalon, Amber shares: Target prices, EMS stocks to buy

MOFSL in its latest note on Electronics Manufacturing Services (EMS) sector said complexity, rather than scale, is becoming the key differentiator in EMS, with original equipment makers (OEMs) increasingly willing to outsource technically demanding products to specialised manufacturing partners.

Strong and diversified order inflows across key sectors position EMS companies well for stable growth in FY27, with robust revenue visibility, MOFSL said. This, it said, should expand the addressable market for Indian EMS players, improve customer stickiness and create a longer runway for growth as their capabilities move progressively from PCBA towards box-build.

MOFSL maintained its 'Buy' rating on Kaynes Technology India Ltd with a target of Rs 5,000. It suggested 'Buy' on Avalon Technologies Ltd (target: Rs 2,740), Cyient DLM Ltd (target: Rs 1,030), Syrma SGS Technology Ltd (target: Rs 2,000), Dixon Technologies (India) Ltd (target: Rs 16,100) and Amber Enterprises India Ltd (target: Rs 8,250). The broking firm has 'Neutral' stance on Data Patterns India with a target of Rs 4,000.

"We expect the current working-capital intensity to moderate as component availability improves, strategic inventories convert into revenue and customer advances/collections normalize," MOFSL said.

It said recent build-up appears to be largely driven by growth and supply-chain risk, while increasing localisation of critical components should gradually improve supply assurance and reduce execution risks for Indian EMS players.

"Going forward, margins are expected to expand due to improving operating leverage, a better product mix toward automotive, industrial and defense segments, and normalization of execution and supply-chain disruptions," MOFSL said.

The brokerage said the aggregate revenue of its EMS universe may grow 32 per cent compounded annually over FY26-28, aided by robust order flows and execution, healthy demand, capacity additions, and the development of new products across key industry verticals.

Consequently, the combined Ebitda margin is likely to expand over FY26-28, fuelled by favorable operating leverage and product mix. Ebitda is expected to register a 37 per cent CAGR over FY26-28.