Dixon Tech, Syrma SGS and Kaynes Tech: JPMorgan recommends these EMS stocks to buy

Shares of Dixon Technologies (India) Ltd., Kaynes Technology India Ltd., and Syrma SGS Technology Ltd. gained as much as 4% on Wednesday, July 9, after global brokerage firm JPMorgan initiated coverage on the stocks.JPMorgan gave an ‘Overweight’ rating to Syrma SGS Technology, citing growth acceleration and margin expansion.

The brokerage expects Syrma to be the third-fastest growing company in its EMS coverage universe, with a 31% revenue CAGR over FY25-28E and a 70 basis points improvement in EBITDA margins to 9% by FY28 on strong demand in the industrial and auto segments and easing pressures in the low-margin consumer vertical.Exports are also expected to rebound from FY27, which JPMorgan believes is not fully reflected in current market expectations, opening room for earnings upgrades.

Dixon Technologies also received an ‘Overweight’ rating. JPMorgan expects a 38% revenue CAGR over FY25E with stable margins.

The brokerage believes that growth will be driven by the mobile segment on the back of an increased order book from its anchor customer and the ramp-up of the Vivo JV starting Q4FY26.It sees further upside in mobile manufacturing, with a total addressable market of 90 million outsourced units and another 50 million in-house units that could shift to outsourcing, compared to Dixon’s own target of 60-65 million units by FY27.

Kaynes Technology was also initiated with an ‘Overweight’ rating. JPMorgan expects it to post the fastest growth among peers, with a 46% revenue CAGR over FY25-28 and a target of $1 billion in revenue by FY28.

JPMorgan called India’s electronic manufacturing services (EMS) space a “sunrise sector” and sees it continuing to deliver strong growth, estimating a 32% revenue CAGR over FY25-30, driven by rising electronics content, the ‘Make in India’ initiative, and global supply chain diversification under the China+1 strategy.

The brokerage also initiated coverage on Amber and Cyient DLM with a ‘Neutral’ rating, and rated Avalon Technologies ‘Underweight’.

Exports, it said, could become the next big growth driver over the long term, with Syrma, Cyient DLM, and Avalon among the key beneficiaries.

Citing a 3x rally in three years and rich valuations across the EMS space, JPMorgan said future upside may depend on consensus earnings upgrades, naming Syrma and Dixon, as its key revision picks.