EMS Q1 Results Preview: Moderate Growth, But Margins To Expand Projects PL Capital

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PL Capital Report

Electronics manufacturing services companies under our coverage are expected to post moderate YoY revenue growth in Q1 FY26, due to single-digit growth in Cyient Ltd. and revenue decline in Syrma. In contrast, Kaynes and Avalon are likely to continue their strong momentum, with YoY revenue growth of 50% and 30%, respectively.

Profitability is set to improve sharply, with margin expansion across the board driven by increasing exposure to highmargin segments. We estimate ~390 bps YoY expansion in Ebitda margin and 59.1% YoY growth in PAT for our EMS coverage universe in Q1 FY26.

Looking ahead, we expect pickup in order book across EMS companies, supported by their strategic focus on higher margin sectors and orders, which should further support margin expansion in the coming quarters. We expect our EMS universe to register sales/Ebitda/PAT growth of 7.5%/73.5%/59.1% YoY in Q1 FY26, on the back of robust order execution and margin improvement led by cost rationalization and increased contribution from high-margin segments.

We continue our positive view on EMS companies that will see healthy growth and continuously expanding opportunity market.

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