Synopsis : India's Electronics Manufacturing Services (EMS) sector continues to benefit from rising domestic manufacturing, AI-driven demand, and strong order inflows. Motilal Oswal remains bullish on the sector and sees up to 32% upside in select EMS stocks over the medium term.
India's Electronics Manufacturing Services (EMS) industry is emerging as one of the strongest beneficiaries of the country's manufacturing push, supported by increasing electronics consumption, government incentives, and global supply-chain diversification.
According to a recent report by Motilal Oswal, the sector remains well-positioned for long-term growth despite challenges such as higher memory-chip prices, commodity inflation, and supply-chain disruptions. The brokerage believes most companies have successfully managed these pressures through pricing agreements, operational efficiencies, and strong customer relationships.
As global manufacturers continue shifting production away from concentrated supply chains, India is increasingly becoming a preferred electronics manufacturing destination, creating significant opportunities for listed EMS players.
Motilal Oswal's Top EMS Stock Picks
The brokerage has maintained a positive outlook on several EMS companies, citing strong order visibility and robust earnings growth potential.
| Company | CMP (Rs) | Target Price (Rs) | Upside |
|---|---|---|---|
| Kaynes Technology | 3,039 | 4,000 | 31.6% |
| Dixon Technologies | 11,504 | 14,600 | 26.9% |
| Avalon Technologies | 1,663 | 2,050 | 23.3% |
| Amber Enterprises | 7,332 | 8,450 | 15.2% |
| Cyient DLM | 445 | 560 | 25.8% |
| Syrma SGS | 1,263 | 1,620 | 28.3% |
| Data Patterns | 4,536 | 3,980 | -12.3% |
Motilal Oswal continues to maintain Buy ratings on most EMS stocks under its coverage while retaining a Neutral stance on Data Patterns.
Order Books Continue To Strengthen
A key driver behind the brokerage's optimism is the strong expansion in sector-wide order books.
According to the report, the aggregate order book across covered EMS companies grew 25% year-on-year to approximately Rs 20,500 crore as of March 2026.
Demand remains strong across multiple sectors, including:
- Defence
- Aerospace
- Automotive
- Telecom
- Power Electronics
- Renewable Energy
Kaynes Technology reported one of the largest order books in the sector at around Rs 8,370 crore, while companies such as Avalon Technologies, Cyient DLM, Syrma SGS, and Data Patterns also witnessed healthy growth in pending orders.
The brokerage believes diversified order inflows provide strong revenue visibility for FY27 and beyond.
AI Boom Creating New Growth Opportunities
Artificial Intelligence is emerging as another major growth catalyst for EMS companies.
Motilal Oswal highlighted that memory manufacturers are increasingly allocating production capacity toward AI-focused applications, resulting in elevated demand across the broader electronics ecosystem.
The report noted that AI-driven demand continues to outpace industry capacity additions, creating favorable conditions for manufacturers involved in electronics production, assembly, and component integration.
As data centers, AI servers, and advanced computing infrastructure continue to expand globally, Indian EMS players could benefit from increased outsourcing opportunities.
Rising Input Costs Remain Manageable
The EMS sector has faced higher memory-chip prices, freight costs, labor expenses, and commodity inflation over the past year.
However, the brokerage noted that most EMS companies operate under contractual pass-through mechanisms and cost-plus pricing structures, allowing them to transfer a significant portion of cost increases to customers.
As a result, margin pressures have remained largely under control despite the challenging input-cost environment.
Strong Earnings Growth Expected
Motilal Oswal expects the earnings trajectory of the EMS sector to remain strong over the next two years.
The brokerage forecasts:
- Revenue CAGR: 31% (FY26-FY28)
- EBITDA CAGR: 35%
- Adjusted PAT CAGR: 44%
The report suggests that healthy order books, ongoing capacity expansions, rising localization efforts, and increasing electronics demand should continue supporting growth across the sector.
Conclusion
India's EMS sector remains one of the most compelling manufacturing themes in the market, supported by strong order inflows, AI-led demand, government-backed manufacturing initiatives, and global supply-chain diversification. Motilal Oswal believes companies such as Kaynes Technology, Dixon Technologies, Syrma SGS, Cyient DLM, Avalon Technologies, and Amber Enterprises are well-positioned to capitalize on the next phase of growth, with several offering upside potential of more than 25%.
Disclaimer : The stock ratings, target prices, and growth projections mentioned in this article are based on Motilal Oswal's research report and are for informational purposes only. Investors should conduct their own research and consult a SEBI-registered financial advisor before making any investment decisions.
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