PG Electroplast and Dixon Tech among top 5 EMS stocks, surge 140% in 2024

Investors in the Electronics Manufacturing Services (EMS) sector are reaping the rewards this year, with significant returns that have doubled their wealth. The sector has become a popular choice among investors on Dalal Street, outperforming expectations.

This surge in performance of EMS stocks reflects the rapid growth of the Indian EMS sector, positioning it as a key player in manufacturing and exports. Favorable government policies such as the Production-Linked Incentive (PLI) scheme and the Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS) have contributed to the sector’s expansion, along with India’s cost competitiveness, robust infrastructure, and skilled workforce.

The upward momentum has been further boosted by the “China+1” strategy, enhancing India’s global manufacturing presence. Projections indicate that the global electronics industry is set to reach US$3.1 trillion by CY26, with the EMS sector expected to surpass this growth, expanding at a 5.4% CAGR to US$1.1 trillion.

India’s share in the global EMS market is forecasted to quadruple by CY26, reaching US$80.2 billion, driven by the expanding domestic electronics market growing at a rate of approximately 25.5% to US$282 billion. The sector is fueled by both domestic and export demands, according to Equirus Securities.

Notable performances this year include PG Electroplast with a 140% return, Dixon Technologies with a 96% return, and Kaynes Technologies with a 92% increase in share value. Other stocks like Elin Electronics and Amber Enterprises have also shown substantial gains.

Strong Performance in June Quarter

Systematix Institutional Equities reported a significant growth in revenue, EBITDA, and PAT for the 7 companies in its coverage universe. Strong performances from PG Electroplast, Dixon Technologies, and Amber Enterprises drove these results, surpassing estimates and indicating positive growth prospects for the companies.

Motilal Oswal has initiated coverage on Dixon Technologies with a ‘buy’ rating and set a target price of ₹15,000 per share. The brokerage highlighted Dixon’s rapid growth and diversification in the EMS industry, along with its strategic partnerships and client acquisitions.

The brokerage also initiated coverage on Amber Enterprises with a ‘buy’ rating and a target price of ₹5,000 per share. It emphasized Amber’s expansion into the electronics market and mobility segment, expecting margin improvements and better return ratios in the future.