Motilal Oswal says EMS industry will 'manage' memory shortage impact; Lists top picks

Shares of Kaynes Tech, Dixon Tech, Amber Enterprises gained on Tuesday, June 16, as brokerage firm Motilal Oswal in its note said it is positive on the electronics manufacturing services (EMS) sector.

It said the EMS sector remains on a strong growth trajectory, driven by healthy order inflow. Despite input cost pressure, EMS companies have mitigated the impact via pass-through mechanisms.

The brokerage said memory prices have surged over the past year, driven by AI-led demand and supply constraints as manufacturers prioritise high-bandwidth memory production.

While capacity additions are underway, AI-driven deman is expected to keep memory markets tight and prices elevated over the medium term, Motilal Oswal said. However, the impact on EMS companies should remain manageable, it stated.

Motilal Oswal's analysts believes the EMS sector will maintain its earnings growth momentum.

Going forward, Motilal Oswal estimates a 31% revenue compound annual growth rate (CAGR) over financial year 2026-2028 for these EMS companies, aided by robust order flows, healthy demand, capacity additions, ramp-up of existing and new plants.

Following are Motilal Oswal's top picks from within the EMS Space:

Company	Price Target (₹ / Share)
Kaynes Tech	4,000
Dixon Tech	14,600
Amber Ent	8,450
Syrma	1,620
Cyient DLM	560
Avalon	2,050

On the flip side firm CLSA downgraded its rating on Dixon Tech to "underperform" from "hold" in its latest note but maintained its target price of ₹10,400, which is among the lowest on the Street.

CLSA said the recent rally on expected approvals seen in the Dixon Tech is "overdone". The stock has rallied 24% from March 30's closing levels of ₹9,637. The brokerage expects the company's organic volumes to decline in FY27 as it expects elevated memory prices to have disproportionate impact on the Indian smartphone volumes.

While shares of Dixon Tech have given up gains, those of Kaynes Tech are trading 3% higher on Tuesday. Syrma SGS shares are also off the day's high and are now trading at the flat line.

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