Shares of electronics manufacturing companies rallied on Thursday after the government waived customs duty on a range of key components used in display modules and wireless charging systems, a move aimed at boosting domestic production and reducing input costs.
Avalon Technologies Ltd. led the gains, rising 5.96% to Rs 1,728.40. The stock jumped as much as 7.83% during the session to hit a high of Rs 1,759. Syrma SGS Technology Ltd. gained 4.44% to Rs 1,426.90 after rising as much as 5.33% to Rs 1,439.
Dixon Technologies India Ltd. advanced 4.11% to Rs 13,466 and touched an intraday high of Rs 13,511, up 4.46%. Kaynes Technology India Ltd. rose 3.14% to Rs 3,311.40. The stock gained as much as 3.40% during the session to hit a high of Rs 3,319.90.
The government has exempted customs duty on key components used in display module assemblies for automotive, medical and industrial applications. The relief has also been extended to parts used in wireless charging modules for smartphones.
The exemptions cover critical inputs such as display cells, backlight units, flexible printed circuit assemblies, NFC coils and neodymium iron boron, or NdFeB, magnets. The duty relief will remain in force until March 31, 2029.
Lower import duties on these inputs could reduce costs for manufacturers and support greater domestic value addition as India seeks to deepen its electronics manufacturing ecosystem.
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Syrma SGS Gets An Additional Boost
Syrma SGS also remained in focus after HSBC initiated coverage with a ‘Buy' rating and a Street-high target price of Rs 1,750. The target implies an upside of about 27% from the stock's July 8 closing price.
The brokerage expects Syrma to benefit from India's expanding electronics manufacturing services industry, backward integration and inorganic growth. HSBC projects India's EMS industry to grow at a 27% CAGR between 2024 and 2029.
India's EMS industry is projected to grow at a 27% CAGR between 2024 and 2029 and capture about 32% of the $320-billion incremental global opportunity during the period, according to HSBC.
HSBC believes Syrma is well placed to benefit as it expands its customer base and vertically integrates. The company has also used inorganic acquisitions and joint ventures to supplement growth. The brokerage highlighted manufacturing incentives and the proposed $13-billion allocation for India Semiconductor Mission 2.0, which could have a trickle-down benefit for EMS companies.
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