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Indian domestic electronic manufacturing market poised for a 25% expansion

The electronic manufacturing sector to register growth, due to favourable Indian and global market conditions, according to Avendus Spark Institutional Equities.

International businesses have started sourcing electronic products from other nations, particularly India, in an effort to lower the danger of dependence on China, the brokerage said in a report issued on June 27.

Higher labour costs in China as compared with India along with government incentives—intended to support local manufacturing and gain scale—are expanding prospects for electronic manufacturers in India to export, according to it.

Import Substitution Opportunity
The non-mobile domestic electronic manufacturing sector is expected to be worth between Rs 400 and Rs 500 billion, the report said.

Approximately 80% of the market’s unmet demand is satisfied by imports—either directly in the form of printed circuit boards or indirectly in the form of finished box construction or equipment, it said.

The Indian government’s programmes—such as the production-linked incentive scheme, Electronic Manufacturing Cluster scheme and promotional programmes—are reducing imports and increasing domestic sourcing in the electronics industry and end-user industries, such as telecom equipment and air conditioners, it said. The addressable market for EMS players is growing as a result.

The domestic EMS market will expand at a CAGR of more than 25% over the coming years, according to the brokerage.

Growth Potential
A significant increase in electronic content across end-user industries—including automotive, consumer durables, industrial, and telecom—will help expand the company potential, the brokerage said.

Due to a shift to electric vehicles, the electronic content per vehicle in the automotive industry is anticipated to triple. The demand for PCB/PCBA (printed circuit board and assembly) in consumer durables is being driven by the expansion of inverter air conditioners, BLDC fans, and more, it said.

The introduction of digital displays in capital goods equipment and the switch from analogue to smart meters in the industrial sector are boosting the demand for electronic components, according to the brokerage.

Three Key EMS Players
The brokerage has a positive outlook on three listed EMS players—Kaynes Technology India Pvt., Syrma SGS Technology Ltd. and Avalon Technologies Pvt.

Kaynes Technology India:

  • Assigns an ‘add’ rating, at a target price of Rs 1,637.
  • Expects 25% growth CAGR over FY23 to FY27.
  • Growth expected due to strong presence in domestic market and expanded high-volume categories, like automobiles and durables, as
  • well as successful application of PLI scheme.
  • Estimates valuation of 55 times on FY25 earnings per share.
  • Out of the two analysts tracking the stock, both recommend a ‘buy’ rating, according to Bloomberg.

Syrma SGS Technology:

  • Has a ‘buy’ rating, with a target price of Rs 598.
  • Expects 28% CAGR growth over FY23 to FY27.
  • Expanding operations in high-volume categories—including automobiles and consumer durables—successful application of PLI programme in the white goods/telecom sectors, expected to drive growth.
  • Estimates valuation of 45 times on FY25 earnings per share.
  • Among the three players, company reported highest revenue in FY23.
  • All six analysts tracking the stock maintain a ‘buy’ rating, according to Bloomberg data.

Avalon Technologies:

  • Assigns a ‘buy’ rating and a target price of Rs 679.
  • Company has a higher export/international presence with 60% revenue coming from exports, primarily to the U.S.
  • Avendus expects 20% revenue CAGR over FY23 to FY27.
  • Valuation of 35 times on FY25 earnings per share estimates.
  • Company had the highest FY23 return on equity, in comparison with the other two listed players.


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