Syrma SGS Technology Ltd. shares surged 3.60% to a high of ₹1,521 on Tuesday following the Ministry of Electronics and Information Technology's approval of its ECMS application. According to NDTV Profit, the engineering and electronics manufacturing services company received approval to manufacture coils worth ₹60 crore. The shares later pared some gains to trade 3.4% higher at ₹1,518, reflecting continued investor confidence in the company's growth prospects. This regulatory milestone comes as Emkay Research maintains its positive outlook on the company, citing diversified growth opportunities in the AI data centre boom.
Emkay Research has issued contrasting recommendations for three Electronics Manufacturing Services (EMS) companies positioned to benefit from India's artificial intelligence data centre boom. According to reports from The Financial Express, the brokerage rates Syrma SGS Technology as 'Buy' with a target price of ₹2,050, implying 35% upside, while Avalon Technologies receives a 'Buy' rating with a target of ₹2,400, offering 24.4% upside. However, Kaynes Technology gets a 'Reduce' rating with a target price of ₹3,300, suggesting 11.6% downside. The recommendations are based on differentiated growth prospects and execution risks across the three companies, with Kaynes being the fastest-growing company on projected revenue with 47.1% revenue CAGR between FY26-29, but facing execution concerns in capital-intensive businesses.
Syrma SGS emerges as Emkay's top pick among the three companies, with the brokerage citing diversified organic and inorganic growth, margin expansion opportunities and consistent execution track record. As reported by The Financial Express, the company has expanded across automotive, industrial, medical technology, information technology and railway electronics sectors. The artificial intelligence server opportunity provides direct entry into a fast-growing segment, with Syrma SGS starting printed circuit board assembly for two Giga Computing server platforms. Emkay expects revenue to grow at 39.6% CAGR between FY26-29 and profit after tax to grow at 43% CAGR, with EBITDA margin improving from 11.3% to 12.5% during this period. The Giga Computing partnership is particularly significant, with the company focusing on artificial intelligence servers and having server architecture certifications from Nvidia, Advanced Micro Devices and Intel.
Avalon Technologies receives a 'Buy' rating based on its position as a one-stop shop for mission-critical box-build EMS, with 75-80% of revenue coming from customers who have been with the company for more than nine years. According to The Financial Express, the company's order book grew at 28% CAGR between FY21-26, while long-term contracts expanded at 15% between FY24-26. US customers accounted for 59% of revenue in Q1 FY27, with management expecting US operations to break even by end of FY27. Emkay projects revenue growth at 44.3% CAGR and profit after tax growth at 56.8% CAGR between FY26-29, with EBITDA margin rising from 10.8% to 14.2%. The company is also the EMS partner for Kyosan's electronic interlocking and Kavach products, with Kavach production guided to begin in the second half of FY27.
Despite Kaynes Technology India being the fastest-growing company on projected revenue with 47.1% revenue CAGR between FY26-29, Emkay's cautious stance reflects execution risks associated with capital-intensive businesses. As reported by The Financial Express, the company's execution risks have increased as it moves into outsourced semiconductor assembly and high-density interconnect printed circuit board manufacturing. Kaynes declined to provide FY27 guidance during recent earnings calls, providing only directional guidance of growing at twice the industry rate. The brokerage expects profit after tax growth at 32.2% CAGR, below Syrma SGS and Avalon, with EBITDA margin declining from 15.8% to 13.9% before recovering over the longer term. Whole-time Director and CFO J. Sampath explained the company's approach to a delayed railway product: 'There's a railway product which got postponed. And being a new product, we don't want to aggressively push this through. We want to give time to all our designers to put their best foot forward so that we can get a bigger share of the business.'
Emkay estimates global data centre capital expenditure at $750-850 billion annually between 2026-2029, creating significant opportunities for Indian EMS companies. According to The Financial Express, advanced artificial intelligence server racks can be priced at $2-3 million each, though EMS business margins remain relatively low at 3.5-8% depending on complexity. The opportunity extends beyond traditional contract manufacturing to server assemblies, advanced printed circuit boards, and system integration. Syrma SGS has the most direct exposure through its Giga Computing partnership, while both Avalon and Kaynes have exposure through the National Supercomputing Mission's Rudra 1 servers. Printed circuit board manufacturing represents another significant opportunity, with Kaynes, Syrma SGS, Amber and SRF targeting ₹6,950 crore of printed circuit board manufacturing capital expenditure by FY28, which could add about $1 billion of production by FY30. Railway electronics is another growth area, with Kavach and electronic interlocking together creating at least ₹500 crore of EMS EBITDA opportunity by 2030.
