Why is India's electronics manufacturing growth slowing down?

Growth is slowing due to high base effects, temporary demand softness in certain categories, working capital pressures, and valuation fatigue among investors.

What challenges is Dixon Technologies facing?

Dixon faces challenges such as a slowdown in consumer electronics, delays in joint venture approvals, and concerns about mobile production incentives expiring.

What issues are affecting PG Electroplast's performance?

PG Electroplast's air conditioner business is impacted by early monsoons, GST changes, and resulting inventory buildup, leading to reduced sales and profits.

Home / Business and Economy / India's EMS Sector: Growth Slows, Investors Wary

India's EMS Sector: Growth Slows, Investors Wary

16 Jan

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Summary

Leading EMS firms like Dixon saw over 30% stock drops.
Kaynes faces transparency concerns despite strong order book.
PG Electroplast's AC business hit by monsoon and GST changes.

India's EMS Sector: Growth Slows, Investors Wary

India's electronics manufacturing services (EMS) sector is undergoing a phase of moderated growth after years of expansion. While fundamental demand drivers remain strong, including import substitution and a "China+1" strategy, companies are facing execution challenges and high base effects. This has resulted in a significant stock price correction, with leading firms like Dixon Technologies, Kaynes Technologies, and PG Electroplast experiencing drops of over 30% from their peaks. Investors are now re-evaluating valuations amidst these shifts.

Dixon Technologies reported robust half-year FY26 results with significant revenue and profit growth. However, segment-specific slowdowns, particularly in consumer electronics like LED TVs and washing machines, along with delays in joint venture approvals and concerns over mobile production-linked incentives, have impacted its short-term performance. The company is pivoting towards high-margin component manufacturing and expanding its mobile segment through new joint ventures and a large manufacturing campus.