Electronic Manufacturing Services - Transforming Dreams Into Devices: Motilal Oswal's Thematic View

BQ Prime’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BQ Prime’s subscribers an opportunity to expand their understanding of companies, sectors and the economy. .Motilal Oswal Report.We initiate coverage on: a) Kaynes Technology India Ltd., Avalon Technologies Ltd., Syrma SGS Technology Ltd. and Cyient DLM Ltd. with a 'Buy' rating; and Data Patterns India Ltd. with a 'Neutral' rating. These companies are some of the key players operating in the Indian electronic manufacturing services space. We believe that these EMS companies are well positioned to gain market share further and deliver robust earnings..The EMS industry has evolved over the years, aided by increased outsourcing of manufacturing activities by original equipment manufacturers. However, still a lion’s share of the total electronics market globally/in India (~65%/77%) is manufactured in-house. Nevertheless, the shift towards EMS has been taking place at a faster rate.With more emphasis on value-added services: Further, the EMS companies – having achieved manufacturing expertise – are climbing the value chain by offering design (original design manufacturing), testing and component sourcing services that are high-margin segments. Newer/advanced technology plays the role of a catalyst: Simultaneously, the electronics market is also evolving rapidly with the onset of new technologies such as electric vehicles, 5G, clean energy, artificial intelligence, virtual/augmented reality and Internet of Things. Newer the technology, higher is the electronics content per devices along with increased complexities. This accentuates the need for EMS companies. Domestic electronics industry at an inflection point: Further, India is witnessing a strong growth in the domestic electronics industry with an expected compound annual growth rate of ~18% during FY21-26. The growth will be fueled by a shift of electronics market from China, govt.’s thrust on making India a global electronics hub and rising export market.  India offers huge headroom for growth.The global electronics market size was ~$2.5 trillion in CY21; of this the global EMS market was valued at ~$880 billion. India formed a small part of the global EMS space with ~2.2% ($20 billion) share, but it is expected to grow the fastest (at 32% CAGR over CY21-26).Backed by indigenisation of raw materials and low-cost labor: The Indian EMS industry has been at a nascent stage at only 0.6% of gross domestic product in FY22. However, it is likely to catapult to a massive Rs 6 trillion by FY27, replicating the success stories of other key sectors such as IT, specialty chemical, auto ancillary and textile. Two key factors that will contribute to this colossal growth are: creation of electronics ecosystem (indigenizing of raw materials) in India and easy availability of low-cost labor. .Cherry-picking the unlisted gems: Among the unlisted EMS companies, there are several sizable players that have demonstrated strong growth and some are leaders in their respective EMS space too. Notable ones among them are Bharat FIH, VVDN Technologies and SFO Technologies..Click on the attachment to read the full report:.TCS Fires 16 Employees, Bars Six Vendors Involved In Hiring Scam.DISCLAIMERThis report is authored by an external party. BQ Prime does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BQ Prime..Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

Electronic Manufacturing Services - Transforming Dreams Into Devices: Motilal Oswal's Thematic View

Initiating coverage on Kaynes, Avalon, Syrma, Cyient DLM with a 'Buy' rating; Data Patterns with a 'Neutral' rating.

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