EMS Stock Jumps 5% After Global Brokerage Initiates Buy Rating With 25% Upside; Check the Stock

Synopsis: Investec has maintained a ‘Buy’ rating on this leading electronics manufacturing services provider, raising its target price to ₹16,200, implying an upside of nearly 25%, on stabilizing mobile demand and market share gains from Chinese peers.

India’s contract electronics manufacturing story is back under the spotlight after a global brokerage turned more constructive on one of the sector’s biggest names. With mobile demand showing early signs of stabilizing and domestic players steadily chipping away at market share held by Chinese manufacturers, the company is emerging as a key beneficiary of this shift in the electronics supply chain.

With a market capitalization of approximately Rs. 79,015 crore, the shares of Dixon Technologies were trading at around Rs. 13,056 per share, with a 52-week range of Rs. 18,471 to Rs. 9,600. It is trading at a P/E of approximately 55x. The stock is up by 5 percent after the rating came into focus.

Investec’s Buy Call

Investec maintained its ‘Buy’ rating on Dixon Technologies, raising its target price to Rs.16,200 from an earlier level, implying an upside of nearly 25% from the current market price of Rs. 13,056. The brokerage has raised its FY27-28 EPS estimates by 6-8%, factoring in the company’s previously guided mobile handset volumes, which are expected to remain largely flat in FY27, excluding Vivo.

Investec’s channel checks with electronics retailers indicate that mobile phone demand has begun stabilizing, with consumers showing greater acceptance of higher prices. The brokerage also believes Chinese electronics manufacturing services companies are gradually losing market share to Indian peers, a trend it expects to continue benefiting domestic players like Dixon.

The brokerage has also raised its revenue estimates for Dixon’s telecom and IT hardware businesses. Despite the expiry of the Production Linked Incentive scheme, Investec expects the company to report broadly flat year-on-year EBITDA during the first half of FY27, followed by a stronger acceleration in earnings growth in the second half.

Additional upside could come from a potential recovery in mobile exports, particularly if the proposed PLI 2.0 scheme is implemented, along with the company’s planned entry into the speciality EMS segment through acquisitions. According to Bloomberg data, 22 of the 32 analysts tracking Dixon Technologies have a ‘Buy’ rating on the stock, while three recommend ‘Hold’ and seven have a ‘Sell’ call.

Business and Financial Overview

For FY26, Dixon Technologies reported consolidated revenue of ₹49,586 crore on a reported basis, up 28% year-on-year. Reported EBITDA grew 69% to ₹2,580 crore, with margins expanding to 5.3% from 3.9% in FY25. Reported PAT (after non-controlling interest) came in at ₹1,439 crore, up 31% over the prior year. 

On an adjusted basis, which excludes the fair value gain on Dixon’s stake in Aditya Infotech and the one-time gain from the lighting business transfer, revenue stood at ₹48,893 crore, up 26%, with adjusted PAT at ₹845 crore, up 20% year-on-year. Adjusted ROCE for the year stood at 44.8% and adjusted ROE at 28.1%. Free cash flow for the year came in at ₹724 crore.

The Mobile & Other EMS division remained the company’s largest revenue contributor, generating ₹44,257 crore in FY26 revenue, up 34% year-on-year, with operating profit rising 35% to ₹1,553 crore. This segment’s share of overall revenue rose to 91% in FY26 from 85% in FY25. The Consumer Electronics & Appliances segment (LED TV and refrigerator) saw FY26 revenue decline 19% to ₹2,892 crore, while the Home Appliances segment posted modest revenue growth of 4% to ₹1,426 crore, with operating profit up 5% to ₹158 crore.

For Investors

Investec’s raised target price, combined with an improving demand environment and market share gains from Chinese EMS peers, strengthens the long-term investment case for Dixon Technologies. Stabilising mobile pricing, a potential PLI 2.0 rollout, and planned entry into speciality EMS through acquisitions could serve as additional earnings catalysts. Investors may, however, wish to track near-term margin pressure from PLI expiry, execution on new acquisitions, and the pace of recovery in mobile exports over the coming quarters.

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