India’s Electronics Manufacturing Services (EMS) sector stock is in the spotlight. This is as a result of the rising domestic manufacturing, increasing electronics demand and a strong order pipeline support long-term growth prospects.
In Motilal Oswal’s latest report, the brokerage house noted that the sector remains on a healthy growth path despite facing challenges such as higher memory chip prices, commodity inflation and supply-chain disruptions.
Furthermore, Motilal Oswal believes that most EMS companies have been able to manage these pressures through pricing mechanisms and operational efficiencies.
At a time when global manufacturers are diversifying supply chains and India is emerging as a key electronics manufacturing hub. As a result, the brokerage house sees several listed EMS players benefiting from the trend.
Let’s take a look at what is driving Motilal Oswal’s investment rationale for the sector and the preferred picks.
Motilal Oswal’s preferred EMS stock picks
As per Motilal Oswal report, strong order inflows and improving execution visibility continue to support earnings growth across the sector.
Preferred EMS stocks
| Company | CMP (Rs) | Target Price (Rs) | Upside / Downside |
| 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% |
The brokerage reiterated its Buy ratings on most of its EMS coverage universe and maintained a Neutral stance on Data Patterns.
Order books continue to expand
One of the biggest reasons behind the positive outlook is the steady increase in order books across the industry.
Motilal Oswal in its report noted, “aggregate order book grew 25% YoY to Rs 20,500 crore as of March 2026.” Further, the report added that this reflects continued demand from sectors such as defence, aerospace, automotive, telecom, power electronics and clean energy.
Motilal Oswal highlighted that EMS companies are seeing “strong order inflows across multiple segments” which is providing better revenue visibility over the next few years.
Kaynes Technology reported an order book of around Rs 8,370 crore, while Avalon, Cyient DLM, Syrma SGS and Data Patterns also saw healthy growth in their pending orders.
According to the Motilal Oswal report, “strong and diversified order inflows across key sectors position EMS companies well for stable growth in FY27.”
Rising costs remain a challenge, but companies are adapting
The sector has not been immune to rising input costs. Memory chip prices, freight expenses, labour costs and commodity inflation have increased over the last year.
The brokerage report noted that “memory prices have surged dramatically in the past year” due to Artificial Intelligence driven demand and supply constraints.
However, most EMS players have managed the situation through contractual agreements and pricing revisions. As per Motilal Oswal report, the sector benefits from “contractual pass-through arrangements and cost-plus pricing structures.”
As a result, higher component costs are largely being transferred to customers, reducing the impact on profitability.
The report further added that “the impact on EMS companies should remain manageable.”
Artificial Intelligence demand creating new opportunities
Another important theme highlighted by the brokerage is the growing demand generated by Artificial Intelligence infrastructure.
Motilal added in the report that memory manufacturers are increasingly allocating production towards Artificial Intelligence-focused applications.This creates a strong demand across the electronics ecosystem.
Motilal Oswal noted that “AI-driven demand continues to outpace industry capacity additions.”
Growth outlook remains strong
The brokerage expects the sector’s earnings momentum to continue over the next two years.
According to Motilal Oswal, the EMS companies under its coverage are expected to see strong growth between FY26 and FY28, with revenue growing at a 31% CAGR, EBITDA at 35% CAGR, and adjusted profit after tax (PAT) at 44% CAGR.
Meanwhile, challenges remain but the brokerage believes strong order books, capacity additions and rising electronics manufacturing activity will continue to support growth.
Disclaimer: This article contains general market commentary and references third-party brokerage ratings for informational purposes. It does not constitute a direct offer, solicitation, or personal investment advice to buy or sell any specific securities. Readers are advised to consult a SEBI-registered investment advisor or qualified financial professional before making any investment decisions based on this data. This disclaimer has been generated using AI to support user well-being and responsible content consumption.