India’s electronics manufacturing services (EMS) sector is entering a decisive phase as leading players embark on aggressive backward integration into component manufacturing, supported by government incentives under the Electronics Components Manufacturing Scheme (ECMS). A recent report from Jefferies cited the scale of the transition, the financial risks attached, and the valuations that investors must weigh carefully.

Jefferies on EMS companies: From assembly of parts to components

According to Jefferies, the easy growth cycle for assembly-focused EMS companies is over. With India importing nearly 90% of its printed circuit boards (PCBs), domestic players are under pressure to localize production. The four leading companies Amber Enterprises, Dixon Technologies, Kaynes Technology, and Syrma SGS are undertaking unprecedented levels of capital expenditure to reduce import dependence and expand up the value chain.

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The report estimates combined capex of approximately Rs 9,000 crore between FY25-FY28, up from Rs 5,800 crore in FY23–FY25. However, Jefferies cautions that such front-loaded spending may compress return ratios in the near-term, with revenue benefits materializing only after a prolonged gestation period.

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Jefferies on EMS companies: Balance sheet stress

The sharp increase in investment has driven all four companies to raise significant sums from private equity investors and the capital markets, the report added.

  • Amber Enterprises secured around Rs 1,800 crore from private equity and an additional Rs 1,000 crore via a Qualified Institutional Placement (QIP) in September 2025.
  • Syrma SGS raised Rs 1,000 crore through QIP in August, with the majority allocated for debt repayment.
  • Kaynes Technology raised nearly Rs 3,000 crore over two QIPs between 2023 and 2025, earmarked for semiconductor packaging (OSAT) and PCB manufacturing projects.

Jefferies mentioned that such dependence on capital markets reflects both the scale of ambitions and the funding strain companies are shouldering.

Jefferies on company-specific strategies

  • Amber Enterprises is investing heavily in multi-layer and high-density interconnect PCBs, with a joint venture alongside Korea Circuits providing technology and initial demand assurance. Jefferies expects Amber’s electronics division to contribute more than 30% of sales by FY28, compared with 22% in FY25.
  • Dixon Technologies is focusing on display modules, camera components, and lithium-ion batteries, including a stake in Q Tech India. While diversification enhances prospects, Jefferies assigns only a Hold rating, citing concentration risks and execution challenges.
  • Kaynes Technology has emerged as an early mover in semiconductors, with a large-scale OSAT facility under the India Semiconductor Mission in partnership with Malaysia’s Globetronics. However, the report warns that the business may remain loss-making in FY27–28 until utilization improves.
  • Syrma SGS is building capabilities in single, multi-layer, and flexible PCBs through joint ventures with Korean and Italian partners. Jefferies notes its contribution to sales will remain modest in the medium term, but strategic partnerships could provide long-term growth levers.

Government Subsidies: Critical to Viability

The Jefferies report stressed that government incentives are central to the financial feasibility of these projects. Amber’s HDI PCB unit, for instance, is expected to receive subsidies covering 60–65% of project costs from central and state schemes. Kaynes and Syrma are also relying on substantial capex-linked and turnover-linked incentives. Delays in disbursement or changes in policy execution could significantly impact project timelines and returns.

Jefferies stock picks across India’s EMS sector

Despite execution and demand risks, Jefferies maintains a broadly constructive stance:

The brokerage gives a Buy rating with a price target of Rs 9,450. This implies upside of 15% from current levels. They estimate a 48x PE multiple for June 2027 EPS, above its five-year historical average.

  • Jefferies on Dixon Technologies: Hold

The brokerage recommended ‘Hold’  with a target of Rs 15,400, implying 7% downside. As per their estimates,  the 60x valuation multiple reflects growth potential but high customer dependency.

  • Jefferies on Kaynes Technology: Buy

The brokerage has a “Buy’ rating with a target of Rs 7,600, assigning a 65x multiple in line with its historical range. The upside from current levels is over 4%

  • Jefferies on Syrma SGS: Buy 

The brokerage recommends Buy with a target of Rs 800, using a conservative 36x multiple, 10 points below its average, to account for execution risks. Jefferies Syrma SGS current trading price is hovering around its target price. 

Jefferies outlook on  India’s EMS sector

Jefferies concluded that India’s EMS sector is at an inflection point. Backward integration into components, supported by state incentives, is no longer optional but essential. The transition is capital-intensive and fraught with execution challenges, yet it offers the opportunity for Indian firms to move decisively up the electronics manufacturing value chain.