The electronics manufacturing services sector in the country is experiencing a significant boom, driven by several key factors, including new segment additions, increased domestic manufacturing, import substitution and strategic global partnerships.
Motilal Oswal Financial Services Ltd. highlighted the promising future of this sector despite some headwinds.
Transformation, Strategy
The EMS companies are expanding into new segments like high-performance computing servers, electric vehicles, global aerospace, data centres and medical technology. There is a strong focus on import substitution and increasing exports by catering to global original equipment manufacturers.
These strategies, although leading to short-term margin pressures, are set to drive strong revenue growth and boost margins in the long term, Motilal Oswal said in a note dated June 6,
Technological Tie-Ups To Drive Growth Story
The EMS companies are leveraging technological partnerships to quickly scale up. These collaborations with the global OEMs provide advanced technologies, helping the EMS firms stay competitive and meet the evolving market demands.
Some partnerships include Kaynes Technology's collaboration with the Centre for Development of Advanced Computing for developing HPC servers and Syrma SGS's partnership with Quectel Wireless Solutions for manufacturing internet of things modules.
Growth Projections
Despite short-term challenges, the long-term outlook for the EMS industry remains positive. Motilal Oswal projects a compound annual growth rate of 39% in revenue, 48% in Ebitda and 54% in net profit for the EMS companies under their coverage over financial year 2024–26.
This growth is expected to be driven by strong order-book execution and the expansion into new and existing end-user industries.
The end-user industries are expected to achieve over 20% CAGR from fiscal 2022 to fiscal 2027. This growth will mainly be driven by the rising usage of electronic devices, the advancement of technologies like IoT and HPC, and the increasing use of electronic components in each device.
RECOMMENDED FOR YOU
![](https://images.assettype.com/bloombergquint/2024-09-04/x83xjcdg/photo-1686273152758-2032416b514b.avif?rect=0%2C0%2C3500%2C1969&auto=format%2Ccompress&format=webp&w=75)
CIDCO To Replace LED Lamps To Protect Flamingos
![timelogo](/images/amp-time.png)
![](https://images.assettype.com/bloombergquint/2023-10/9e447699-2083-4fb9-b28a-b76826f6aae8/ankush_minda_7KKQG0eB_TI_unsplash.jpg?rect=0%2C0%2C3500%2C1969&auto=format%2Ccompress&format=webp&w=75)
Centre Approves Rs 18,306 Crore Indore-Manmad Railway Line Project
![timelogo](/images/amp-time.png)
![](https://images.assettype.com/bloombergquint/2023-10/9e447699-2083-4fb9-b28a-b76826f6aae8/ankush_minda_7KKQG0eB_TI_unsplash.jpg?rect=0%2C0%2C3500%2C1969&auto=format%2Ccompress&format=webp&w=75)
Indian Authorities Identify 38 Priority Rail Projects Under Coal Logistics Plan
![timelogo](/images/amp-time.png)
![](https://images.assettype.com/bloombergquint/2023-05/f2713eb9-b533-498e-86fa-aff3c903760f/josh_appel_NeTPASr_bmQ_unsplash.jpg?rect=0%2C0%2C3500%2C1969&auto=format%2Ccompress&format=webp&w=75)
Motilal Oswal To Raise Rs 200 Crore Through Issuance Of NCDs
![timelogo](/images/amp-time.png)