According to Jefferies' September 9 report, India's electronics manufacturing sector is entering a new phase as policy focus shifts from mobile assembly to deeper supply chain integration. The Electronics Components Manufacturing Scheme (ECMS), introduced in FY26, has received 249 applications with 106 projects approved across five tranches, with the scheme's incentive outlay increased by 75% to ₹40,000 crore after industry response exceeded initial expectations. The Mobile Phone Manufacturing Scheme (MPMS) adds another layer with a ₹62,500 crore budgetary outlay over five years from FY27 to FY31, expecting cumulative mobile phone production to reach ₹39 lakh crore compared to ₹24-25 lakh crore during FY21-FY26. As Jefferies notes, India is taking a "stepwise approach for indigenisation" with the first phase of mobile PLI achieving 99% phone assembly in India, but domestic value addition remained limited, driving the next phase focused on components, value addition and exports.
As reported by Jefferies, the brokerage's preference is clear: "Prefer Component plays vs. Assembly" as India moves from assembly-led to deeper manufacturing. The domestic PCB industry has a total addressable market of about $5 billion, with 85-90% of PCB requirements currently imported. Kaynes Technology is Jefferies' preferred choice with a "Buy" rating and target price of ₹4,480", implying 24% upside, due to its early investment in OSAT and PCB manufacturing ahead of peers. Syrma SGS Technology receives a "Hold" rating with target price of ₹1,430", offering 13% downside, while Dixon Technologies gets a "Hold" rating with target price of ₹12,730, implying 10% downside. The ECMS supports roughly 50% of the mobile phone bill of materials, with printed circuit board manufacturing emerging as a key opportunity as the scheme supports front-ended capital expenditure, lower asset turns and longer gestation periods.
According to Jefferies' analysis, Kaynes Technology is projected to deliver 30% sales CAGR during FY26-FY29, substantially above Dixon's expected 19% CAGR after its exceptionally strong FY23-FY26 expansion. Syrma SGS Technology is expected to deliver 42% sales CAGR during FY26-FY29, the strongest growth rate among the three companies. The brokerage expects Dixon's mobile and EMS sales growth to normalise to 19% CAGR over FY26-FY31, compared with a much faster 104% CAGR during FY23-FY26. Kaynes' forward valuation has fallen materially from its October 2025 peak, with the one-year forward price-to-earnings multiple around 50 times in September 2026, below its historical average of 65 times. Syrma's valuation shows a one-year forward price-to-earnings multiple of around 55 times, about 50% above its historical average and ahead of several EMS peers.
As reported by Jefferies, printed circuit board manufacturing is a key focus of ECMS, with HDI and multi-layer PCB manufacturing offering substantial localisation opportunities. The domestic PCB industry is estimated at $5 billion with 85-90% of requirements currently imported. Both Kaynes and Syrma have moved into PCB manufacturing, while Dixon is expanding its backward-integration efforts across other components. The need for technology partnerships remains important, with Jefferies pointing to potential partnerships involving Dixon and Syrma as ways to bridge technology gaps and accelerate domestic component capabilities. Kaynes is among the companies receiving ECMS support with approved projects covering multi-layer PCBs, high-density interconnect PCBs, copper laminate and camera modules, while Syrma has received approvals covering multi-layer PCBs, camera modules, high-density interconnect and flexible PCBs, copper laminate and coils.
According to Jefferies' valuation assessment, Kaynes offers the strongest positive gap to its target among the three companies, while Dixon and Syrma trade above their respective disclosed targets. Syrma's one-year forward price-to-earnings multiple is around 55 times, about 50% above its historical average and ahead of several EMS peers. The brokerage's target multiple of 45 times for Syrma is itself around 15% above the historical average. This explains why Jefferies' sector preference for components does not automatically translate into a 'Buy' call on Syrma despite its strong growth prospects. The valuation differences reflect the trade-off between component manufacturing's larger addressable market and faster revenue growth potential, versus the higher upfront capital requirements and longer gestation periods associated with this transition. Dixon's premium multiple is supported by prospective volume opportunities from the new mobile manufacturing scheme and Vivo PN3 approval, though Jefferies has factored in rising memory prices.
