EMS Industry - A Mixed Bag Q4; Management Guidance Remains Robust: Systematix

Systematix Research Report

The seven EMS companies under our coverage reported 27%/20%/17% YoY rise in revenue/Ebitda/profit after tax and were broadly inline with our estimates. Kaynes and PG Electroplast results beat our estimates (also gave strong guidance); Avalon and Dixon Technologies missed estimates by a wide margin.

Elin continued to report weak results while Amber Enterprises’ healthy margins made up for its weak revenue. Syrma's profit after tax declined 17% YoY despite a 67% YoY surge in revenue.

Despite a mixed bag Q4, companies remained bullish on their growth outlook (refer company section). Government of India’s vision of Make in India, Make for world, backed by various schemes and incentives have aided to India’s growing acceptance as an alternate manufacturer to China.

Import substitution and India’s rising penetration in the domestic market provide a large opportunity for the Indian EMS industry. We thus remain structurally positive on the industry.

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