Kaynes Tech gains 5% on CLSA’s bullish projections for EMS sector

For Kaynes Tech, CLSA has an ‘outperform’ rating with target at Rs 2,230 a share, 11 percent higher from the current market prices. It India’s Electronics Manufacturing Services industry to deliver a 22 percent revenue CAGR over the next decade

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Kaynes Technology was up 5 percent in the morning trade on September 7, leading gains in Electronics Manufacturing Services (EMS) firms on strong growth prospects for the sector.

Foreign broking firm CLSA expects India’s EMS industry to deliver a 22 percent revenue CAGR over the next decade. It expects mid-teens CAGR over FY30-40, with the industry size reaching $372 billion by FY40.

Not just Kaynes Technology, the strong growth projections also resulted in gains for Amber Enterprises and Dixon Technologies. At 10 am, Amber Enterprises and Dixon Technologies shares were higher by 1.3 percent from the previous close.

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CLSA has assigned a “buy” rating to Amber Enterprises, with a target of Rs 3,650 a share, indicating a 19 percent upside from the current levels. The firm has assigned “outperform” rating to Dixon Tech at a target of Rs 5,675 a share, a 12 percent upside from the current market price.

For Kaynes Tech, CLSA has an “outperform” rating with the target at Rs 2,230 per share, which is 11 percent higher more than the current levels.

“Global supply chain shift will benefit India. The scale of the opportunity is 20 times in two decades,” CLSA noted.

Kaynes Tech stands to gain as it has a well-diversified presence across various industrial segments.

While Amber Enterprises is set to benefit from rising consumer adoption of air-conditioners, Dixon Tech is set to gain from mobile phone manufacturing.

Also Read: Midcap Magic | Kaynes Technology, the Gundappa Vishwanath of electronics manufacturing, poised for long-term growth

Another foreign broking Morgan Stanley has similar growth projections for the EMS industry. It sees 21 percent CAGR in electronics manufacturing in FY22-32, on the back of rising disposable income per capita, increasing number of households, improving access to electricity, easier availability of financing and expansion of e-commerce.

“Reconfiguration of global supply chains from growing multipolarisation is leading to major adjustments in the tech sector. Re and friend-shoring along with India’s ongoing structural transformation could see India play a major role in technology-related production, while Apple and its supply chain coming to India would bring in fresh investment,” Morgan Stanley said in July 3 note.

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