EMS stocks slip as Dixon Tech, Amber Ent drop up to 9%; here's why

Kaynes Tech stock has recently taken a hit following concerns around the company's accounting disclosures, which made market participants nervous

Shares of industrial products firms like Dixon Technologies Ltd. and Amber Enterprises Ltd. slipped in trade on Wednesday, dragged down by continued selling in peer Kaynes Technology.

 

Dixon Technologies' stock fell as much as 9.2 per cent to Rs 12,261 per share during the session, but later pared losses to close 8.6 per cent lower. Likewise, the stock of other Electronics Manufacturing Services (EMS) players like Amber Enterprises and PG Electroplast tumbled 2.7 per cent and 3.6 per cent, respectively. 

 

Dixon Tech shares are down 31 per cent so far this year, while Amber Enterprises and PG Electroplast are down 11 per cent and 45 per cent, respectively.

 

Why were EMS players under pressure?

The plunge in today's session came on the back of persistent selling pressure seen in the counter of Kaynes Technology. The stock fell over 10 per cent in Wednesday's session. The stock is down 29 per cent so far this month, the steepest since January 2025. 

 

As many as a combined 10.33 million equity shares representing 15.4 per cent of the total equity of the company changed hands on the NSE and BSE.

 

Kaynes' stock has recently taken a hit following concerns around the company’s accounting disclosures, which made market participants nervous.  Kotak Institutional Equities, last week, flagged in a report inconsistencies in the company’s related party transactions, an ambiguous accounting treatment of goodwill or reserve adjustments under acquisitions, and sharp additions to intangibles for technical know-how, among other issues at the company. READ MORE ABOUT THE COMPANY HERE

 

However, the company, on Tuesday, clarified that it has not entered into any negotiations to change its statutory auditor, refuting a recent media report that suggested the company was considering such a move.

 

Under related party transaction (RPT) disclosures, the company inadvertently failed to report reconciled balances between subsidiary companies, ICICI Securities said.

 

Although the reporting was missed at the company’s end, it seems like a negligence sort of error rather than anything on the governance front. The overall P&L and balance sheet are not misstated. Similarly, post management’s clarification on other issues, it seems sub-par disclosure created misinterpretation rather than management’s malafide intention, the brokerage firm said in the company update.