Dixon Tech, Syrma SGS, Kaynes Tech shares rally 8% as JPMorgan initiates coverage with 'overweight' tag

Mumbai, July 9, 2025 — Shares of Dixon Technologies, Syrma SGS Technology, and Kaynes Technology surged up to 8% in Tuesday’s trading session after global brokerage JPMorgan initiated coverage on the three companies with an ‘Overweight’ rating, citing robust fundamentals, rising global outsourcing trends, and tailwinds from the Indian government’s production-linked incentive (PLI) scheme.

The rally comes amid increased optimism around India's electronics manufacturing services (EMS) sector, which is rapidly gaining investor attention due to its role in global supply chain diversification and digital transformation.

Brokerage Backing Triggers Buying Spree

JPMorgan’s initiation note emphasized the structural growth opportunity in India’s EMS space. The brokerage stated that Dixon, Syrma SGS, and Kaynes are well-positioned to benefit from the ongoing global shift towards China+1 sourcing strategies and the Indian government’s thrust on local manufacturing.

“We expect India’s EMS exports to see a 3x growth over the next 5 years, led by a growing domestic ecosystem and scale advantages,” JPMorgan said in its note. “Dixon, Syrma SGS, and Kaynes have differentiated business models, strong client bases, and significant potential for margin expansion.”

The brokerage assigned price targets that imply a potential upside of 15–25% over the next 12 months:

• Dixon Technologies: Target price of ₹9,800

• Syrma SGS Technology: Target price of ₹820

• Kaynes Technology: Target price of ₹2,500

Stock Movement Snapshot

Following the brokerage call, shares of all three companies saw a sharp uptick:

• Dixon Technologies surged 7.9% to close at ₹9,120

• Syrma SGS jumped 8.3% to ₹755

• Kaynes Technology rose 7.7% to ₹2,360

The surge added over ₹5,000 crore in combined market capitalization to the trio, with retail and institutional investors showing renewed interest.

Sector Context: India’s EMS Boom

India’s EMS sector has been in the spotlight amid rising demand for locally manufactured smartphones, consumer electronics, EV components, and industrial IoT devices. The government’s Make in India and PLI schemes have significantly lowered entry barriers, encouraging global giants like Apple, Samsung, and Tesla to expand their India footprint through local partnerships.

“There’s a tectonic shift happening in global electronics manufacturing. India is increasingly being seen as a credible alternative to China,” said Nikhil Agarwal, VP at Avendus Capital. “Companies like Dixon and Kaynes are riding this wave, adding capacity, and diversifying into high-value segments like wearables and automotive electronics.”

Company Breakdown: Why JPMorgan Is Bullish

Dixon Technologies

India’s largest EMS player, Dixon has rapidly diversified from LED TVs and washing machines into smartphones, wearables, lighting, and telecom gear. The company recently secured fresh orders from a global tech giant for smartphone assembly.

“Dixon is building scale and credibility. Margin headwinds are easing, and new PLI-based orders could drive a 20% CAGR in earnings over the next 3 years,” JPMorgan noted.

Syrma SGS Technology

Focused on high-margin segments like industrial electronics, automotive sensors, and medical devices, Syrma SGS has leveraged its R&D capabilities to differentiate itself in a competitive market.

“Syrma SGS’s deep engineering and design capabilities give it a moat in B2B electronics. We see strong growth visibility and improving return ratios,” JPMorgan added.

Kaynes Technology

Kaynes has built a niche in end-to-end EMS solutions, from prototyping to full-scale manufacturing. It is a key supplier for EV and aerospace clients and is expanding its presence in North America.

“Kaynes is an underrated play on India’s electronics exports. With order visibility improving and new plants coming online, its valuations look compelling,” said Priya Natarajan, Analyst at JPMorgan India.

Investor Outlook: Long-Term Tailwinds Intact

The positive coverage from JPMorgan has strengthened investor confidence in the EMS space, which has already seen significant rerating over the last two years. Analysts believe the runway for growth remains long.

“While valuations aren’t cheap, the structural story is intact,” said Rakesh Bansal, a market strategist at IIFL Securities. “Investors with a 3-5 year horizon should see strong compounding potential.”

Domestic mutual funds and FIIs have been steadily increasing their exposure to these stocks, especially as India’s weightage in global indices rises and sector-specific ETFs gain traction.

The sharp rally in Dixon Technologies, Syrma SGS, and Kaynes Technology underscores the growing optimism around India’s EMS potential. With strong macro tailwinds, policy support, and increasing global demand, these companies could be at the forefront of India’s journey to becoming a global electronics manufacturing powerhouse.