India's electronic manufacturing services space is likely to witness a boom, with the cumulative production expected to surge from $115 billion in fiscal 2024 to $450 billion by fiscal 2030, according to Nomura Holdings Inc.
The country's tech boom will "create new global leaders" in the coming period, Nomura said in a Sept. 11 report. As such, Nomura has initiated coverage on Dixon Technologies (India) Ltd. and Kaynes Technology India Ltd. with a 'buy' ratings.
Dixon will capitalise on its significant B2C opportunity, while Kaynes will benefit from the rising electronics penetration in B2B and expansion into OSAT/PCB manufacturing, the brokerage said.
Nomura has set a target price of Rs 15,567 per share for Dixon, implying a 22% upside from the previous close, and Rs 5,969 apiece for Kaynes, indicating a 28% increase.
Dixon is likely to be the key beneficiary of localisation in mobiles and IT hardware, Nomura said. The company is expected to cater to more than 30% of India's mobile industry by fiscal 2027, with further upside from exports, it said.
"Kaynes is a play on the rising electronics content in B2B industrial segments such as auto, EV, and railways, with a strong orderbook driving high growth visibility," the report said.
Nomura further noted that its fiscal 2027 earnings estimates for Kaynes and Dixon are "13-27% ahead of Bloomberg consensus.".
Bullish On India's EMS
"The global electronics industry has flourished in countries that have strong government support, a skilled, low-cost labour force, and companies with precision manufacturing capabilities. These enablers are now present in India, causing an inflection in electronics production," Nomura said.
According to the research firm, early success in India's EMS is visible in mobile assembly, but "we expect more traction in segments that command large TAMs such as IT hardware and semiconductor manufacturing."
Nomura said that an increased focus on component manufacturing could drive domestic value addition from 15-20% at the moment to around 35-40% over the next decade.
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