Jefferies says 'Buy' Amber, Syrma, 'Hold' Dixon amid PCB expansion plans

Jefferies on India EMS sector: India’s electronics manufacturing services (EMS) sector is on the cusp of a major expansion, with leading players Amber Enterprises (Amber), Syrma SGS Technology (Syrma), and Dixon Technologies (Dixon) leveraging the government’s Electronics Component Manufacturing Scheme (ECMS) to scale up production in high-value components. 

 

According to Jefferies analysts, these moves could reshape revenue mix and profitability for the companies in the coming years.

 

Amber and Syrma are primarily targeting printed circuit board (PCB) manufacturing, while Dixon is focused on backward integration in mobile value chains, specifically camera and display modules. 

 

“The application window for ECMS is open until the end of September 2025. Approval could take a few months, after which plant execution will commence,” the brokerage said.

 

 

Amber has filed two applications under ECMS, one for multi-layer PCBs worth ₹990 crore and another for HDI PCBs via a joint venture worth ₹3,200 crore. The company plans phased investments, with around 60-65 per cent expected to be subsidised by central and state governments. “We estimate Amber’s Electronics division, including PCB and recent acquisitions, to rise to over 30 per cent of sales by FY28, up from 22 per cent in FY25,” Jefferies noted.

 

Syrma, meanwhile, is entering PCB manufacturing through a 75:25 joint venture with Shinhyup Electronics of Korea, backed by a total capital expenditure of $91 million. About 40 per cent of this is expected to be subsidised under the government scheme. In addition, Syrma has partnered with Italian electronics firm Elemaster (60:40 JV) to serve multiple sectors, with its Bengaluru facility configured for SMT, THT, and box-build assembly. “PCB could contribute less than 5 per cent to Syrma’s sales by FY29,” Jefferies said.  ALSO READ | Should you avoid rate-sensitives stocks as RBI MPC holds policy rates?

Dixon focuses on mobile component integration

 

Dixon is taking a different route, aiming to strengthen its mobile ecosystem through camera and display module manufacturing and Li-ion battery production via a newly incorporated subsidiary. This backward integration strategy is intended to secure higher value-add margins across its products.

Jefferies sees strong growth potential amid EMS capex surge

 

India’s PCB market, currently valued at around $5 billion, relies heavily on imports, with roughly 90 per cent of demand met externally. The government has imposed a ~30 per cent anti-dumping duty on PCBs up to six layers in H1 CY24, creating a substantial import substitution opportunity. Notably, Kaynes Technology had already forayed into PCB manufacturing and OSAT solutions prior to ECMS, giving it a head start in the space.

 

Jefferies expects capex for the four covered EMS companies to surge to ₹9,000 crore in FY26-28, up from ₹5,800 crore in FY23-25. “Amber and Kaynes have been front-loading investments in components ahead of peers. Near-term returns could remain range-bound until utilisation ramps up,” the brokerage observed.

 

Funding has been secured to support these expansion plans. Amber raised ~₹1,800 crore in its electronics subsidiary ILJIN from private equity firms, alongside a ₹1,000 crore QIP. Syrma completed a ₹1,000 crore QIP, and Kaynes raised ₹1,600 crore via QIP to fund OSAT and PCB initiatives.

 

Thus, Jefferies maintained a ‘Buy’ rating on Amber (target: ₹9,450), Syrma (target: ₹800), and Kaynes (target: ₹7,600), while Dixon (target: ₹15,400) is rated ‘Hold.’ Target PEs for FY27 are 42x for Amber, 39x for Syrma, and 65x for Kaynes, reflecting expected growth from new component forays.

 

That said, India’s EMS landscape is entering a transformational phase, with government incentives, high import substitution potential, and strategic forays into high-value components poised to drive revenue and margin expansion.