India has benefited significantly not only from defence but also from electronics manufacturing, with the Make in India programme acting as a key catalyst by pushing localisation, scale, and supplier depth across both segments.
Leveraging this, India’s Electronics Manufacturing Sector (EMS) has grown nearly 6X to ₹11.3 lakh crore in FY25, from ₹1.9 lakh crore in FY15. The Production Linked Incentive (PLI) Scheme, tax and customs reforms, and the removal of other bottlenecks have contributed to this growth. The number of local manufacturers has also increased from just two in 2014 to over 300.
The Macro Engine: From Domestic Assembly to Global Export Powerhouse
Moreover, electronics exports also grew significantly during the period, from ₹38,000 crore to ₹3.3 lakh crore, making electronics the third-largest export category for India. Building on this momentum, the government also launched the Electronics Components Manufacturing Scheme in 2025.
Electronics Exports Increase 8-fold
For this, proposals worth ₹1.1 lakh crore have already been received, which is much higher than the estimated total investment of ₹59,350 crore. Nevertheless, today we focus on three EMS stocks that have benefited from rising electronics exports.
This deep dive is being undertaken post a sharp correction in the stock prices of EMS stocks. Given the fundamentals, are stock prices finally at attractive levels?
Take a look…
#1 Avalon Technologies: Export-led growth in high-value EMS
Avalon is a fully integrated EMS company with a global delivery footprint. With a presence in emerging sectors such as clean energy (18% of revenue in H1FY26), Industrial (34%), aerospace, and semiconductors, Avalon differentiates itself from other EMS players like Dixon.
H1 FY26 revenue rose by 48.7% year-on-year to ₹706 crore, while Q2FY26 revenue rose 39% to ₹382 crore. Avalon demonstrated significant profitability growth, with EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation) nearly doubling. H1 FY26 net profit surged 158% year-on-year to ₹39 crore, with Q2 contributing ₹25 crore (up 43%).
The ‘Dual-Shore’ Strategy Against Global Tariffs
Having said that, Avalon operates a “dual-shore” model that distinguishes between where its customers are located (revenue by geography) and where the products are built (manufacturing operations). Most production remains in India, irrespective of customer location.
Avalon’s export strategy leverages its U.S. manufacturing presence to acquire clients. Once established, production is transferred to India to leverage lower labor costs and scale, a strategy the company describes as “Build Local, Expand Global.”
About 61% of Avalon customers are located in the U.S., with the remaining (39%) in India. India accounts for 81% of the manufacturing footprint, while the U.S. contributes the remaining 19%. In the revenue mix, 61% of revenue came from exports (U.S.), while India accounted for 39% in Q2FY26. The export business is driven by clean energy and the aerospace industry.
Avalon Revenue-Mix
Avalon maintains a long-term strategic goal of achieving a 50:50 split between India and export revenue. In fact, both markets demonstrated strong growth in the H1FY26. The India business grew by 44%, while the U.S. business grew by 52%.
With a manufacturing base in the U.S., Avalon is largely immune to tariff risk. Avalon offers an “early stopover” in the U.S. to begin production immediately, allowing clients to move to India later when tariff conditions improve or for long-term cost benefits. Management stated that despite fluctuations, they have recovered over 99% of tariffs from customers.
Beyond Traditional EMS into Aerospace and Clean Energy
Looking ahead, the export outlook is supported by ramp-ups in specific high-value verticals. Avalon is seeing a substantial production ramp-up for a major US-based energy storage system program that has been in development for 4 years.
The aerospace vertical grew 59% in H1FY26. First-article inspections for new programs, like cabin subassemblies, are underway, with volume ramp-up expected in H12026. In the semiconductor equipment, Avalon is shipping prototypes, and volume production is expected to ramp up in FY27.
The Chennai Facility’s Role in Global Delivery Capacity
During the quarter, Avalon also added three large US-based customers in the industrial and defense sectors. Manufacturing for these clients will begin in the US, followed by India. To support this export demand, Avalon’s new export-focused plant in Chennai has commenced production and is gradually ramping up.
#2 Kaynes Technologies India: From EMS to semiconductor-led ESDM
Kaynesis shifting from a traditional EMS player to a fully integrated Electronic System Design and Manufacturing (ESDM) enterprise.It is actively backward integrating into semiconductor packaging (OSAT) and Printed Circuit Board (PCB) manufacturing while expanding its global footprint through acquisitions.
Kaynes is actively expanding its export capabilities, moving from a domestic player to a global player. As of H1FY26, most of Kaynes revenue comes from India (91%), while North America and Europe account for 5% and 4%, respectively. The company serves over 500 customers in 30+ countries, including large multinational companies.
How North American Acquisitions Drive Global Market Entry
Kaynes is pursuing inorganic growth to establish a presence closer to global customers and access high-margin markets. The acquisition of August Electronics (Canada) and Digicom (U.S.) strengthens its North American manufacturing footprint and provides access to customer bases.
Acquisitions by Kaynes to Fuel Export Growth
The acquisition of Sensonic (Austria) expands its footprint in smart rail-tech and Internet of Things (IoT) solutions. The aerospace and defence sector is expected to be a significant driver of export growth. Management highlighted securing “sizable amount of orders from one of the OEMs abroad”. This segment is seeing an increasing trend in revenue contribution.
Transforming into a Semiconductor OSAT Player
Management expects to receive final approval from a major U.S. customer by the end of FY26, which will significantly boost revenue from this segment. In addition, Kaynes sees its OSAT initiatives as a key lever to position India in the global semiconductor value chain.
Leveraging Global Partnerships
It has already secured global anchor customers, including Alpha & Omega Semiconductor (AOS), Infineon, and L&T Semiconductor. Also, Kaynes has already shipped India’s first commercially manufactured multi-chip module to AOS. In addition, the upcoming PCB facility is expected to generate business from export customers starting in year three of operations.
#3 Syrma SGS Technology: Design-led EMS with Rising Exports
Syrma is a leading ESDM company that provides comprehensive EMS services, from product design to mass production. Syrma manufactures electronic components and subassemblies for several niche sectors, including automotive, industrial, consumer electronics, IT, railways, and healthcare.
Leveraging the Industrial Segment for 34% Export Growth
Exports have become a key driver of Syrma’s growth, delivering double-digit growth and contributing significantly to the company’s revenue mix. Export revenues grew approximately 34% year-on-year to ₹502 crore in H1FY26. Exports contributed 24% to revenues in H1FY26. In the export revenue, the U.S. accounts for 5-6% of the company’s total revenue (₹2,090 crore).
Export accounted for 24% of Revenue
Targeting a ₹1,000 Crore Export Milestone in FY26
Management views exports as a vital component for the company’s long-term sustainability and growth. Syrma is on track to achieve its target of ₹1,000 crores in export revenue in FY26. Management stated that long-term sustainability for any EMS company relies on strong export performance. So, its endeavor is to expand this base and further grow the export bucket.
The Industrial segment is a major contributor to export growth, with the company meeting the requirements of global customers outside India. However, Syrma is currently facing challenges due to U.S. tariffs. This led to a decline in volumes. Clarity is expected to help solidify future plans as the U.S. remains a key player in its strategy to expand its export presence.
The Elemaster JV and the European Railway Opportunity
Syrma SGS is laying the groundwork for future export expansion through its recent strategic joint ventures (JVs) and acquisitions. Although some of these will primarily serve domestic needs in the immediate term. The JV with Elemaster focuses on design-led manufacturing for European OEM programs in the railway, industrial, and medical sectors.
While the initial phase will cater to the Indian market to establish credibility, the long-term goal is to integrate into Elemaster’s global supply chain. Management noted this integration might not happen in FY26 or FY27, but will form a substantial growth base in the years to come.
The Multi-Billion Dollar Potential of the New PCB Facility
In addition, the new PCB facility is receiving strong interest from global multi-billion-dollar groups. In the short term, the facility will cater to the domestic market to indigenize supply chains. However, looking beyond FY28, the company plans to target export markets across automotive, consumer, industrial, med-tech, and telecom sectors.
The Valuation Verdict
EMS stocks witnessed up to a 50% valuation de-rating after the sharp correction in stock prices. This great EMS de-rating has compressed sector valuations, with Kaynes and Dixon among the most impacted. But, Syrma and Avalon have seen comparatively lower declines, with both delivering positive and sizeable returns in last one year.
1-Year Share Price Price Performance
This may be due to their presence in emerging, high-margin sectors. Although valuations for all three companies have come down sharply vis-à-vis their respective 3-year medians, they are still not cheap relative to the industry median.
Furthermore, even on an absolute basis, the valuations still appear pricey, as these businesses continue to rely on PLI incentives and deliver Return on Capital Employed (ROCE) and Return on Equity (ROE) that remain below moderate levels.
Extensive dependence on PLI schemes also exposes them to policy risk. Additionally, higher memory and raw material prices could squeeze margins. That said, over the long term, the structural opportunity for EMS players remains intact, driven by India’s growing role in global electronics manufacturing.
| Peer Comparison (X) | |||||
| Company | P/E | 3Y Median P/E | Industry P/E | RoCE (%) | RoE (%) |
| Avalon | 61.3 | 79.4 | 23.7 | 12.8 | 10.4 |
| Kaynes | 59.8 | 120.0 | 29.4 | 14.3 | 10.7 |
| Syrma | 55.9 | 71.0 | 11.7 | 9.5 | |
| Dixon | 48.6 | 117.9 | 25.7 | 40.0 | 32.9 |
| Source: Screener.in (As of 23 January, 2026) | |||||
However, even after the recent correction, valuations across these companies remain demanding. As PLI benefits taper over time, the key monitorable will be whether they can sustain margins and justify current valuations through execution rather than policy support.
Disclaimer:
Note: Throughout this article, we have relied on data from http://www.Screener.in and the company’s investor presentation. Only in cases where the data were unavailable have we used an alternate, widely accepted, and widely used source of information.
The purpose of this article is only to share interesting charts, data points, and thought-provoking opinions. It is NOT a recommendation. If you wish to consider an investment, you are strongly advised to consult your advisor. This article is strictly for educational purposes only.
About the Author: Madhvendra has been deeply immersed in the equity markets for over seven years, combining his passion for investing with his expertise in financial writing. With a knack for simplifying complex concepts, he enjoys sharing his honest perspectives on startups, listed Indian companies, and macroeconomic trends.
A dedicated reader and storyteller, Madhvendra thrives on uncovering insights that inspire his audience to deepen their understanding of the financial world.
Disclosure: The writer and his dependents do not hold the stocks discussed in this article.
The website managers, its employee(s), and contributors/writers/authors of articles have or may have an outstanding buy or sell position or holding in the securities, options on securities or other related investments of issuers and/or companies discussed therein. The articles’ content and data interpretation are solely the personal views of the contributors/ writers/authors. Investors must make their own investment decisions based on their specific objectives, resources, and only after consulting such independent advisors as may be necessary.