What explains a 50% crash in EMS leaders? While bigger players bear the brunt of it, smaller ones stay resilient, betting on margins, precision manufacturing and long-cycle industrial, defence and automotive demand.
A sharp correction in India’s electronic manufacturing services (EMS) stocks has punctured a euphoric rally, with shares of Dixon Technologies (India) and Kaynes Technology India falling by as much as 50%, as valuations snapped back towards fundamentals.
The sell-off has unsettled investors but also highlighted a clear divergence within the sector. While stocks such as Dixon Technologies, Kaynes Technology and PG Electroplast have plummeted steeply since late 2025, smaller peers Syrma SGS Technology and Avalon Technologies have shown relative resilience.
According to a Financial Express report, the decline in frontline EMS stocks reflects valuation excess rather than a collapse in industry prospects. Structural tailwinds remain firmly in place. These include India’s push for import substitution, rising electronics penetration, the China-plus-one supply chain shift, and sustained policy support under the Production Linked Incentive (PLI) scheme.
The PLI programme had reportedly attracted actual investments of around ₹2 trillion by September 2025 and generated incremental production worth more than ₹18.7 trillion. The large-scale electronics manufacturing segment alone accounted for ₹386.45 billion of PLI allocation.
Against this backdrop, Syrma SGS Technology and Avalon Technologies have shown relative resilience. Both companies have limited exposure to consumer electronics and instead focus on industrial, automotive, defence and medical segments, which offer longer product cycles and stronger pricing discipline.
Syrma has consciously prioritised margin expansion over aggressive topline growth. In the first half of FY26, revenue rose 4.4% year-on-year to ₹20.93 billion. EBITDA increased 60% to ₹2.266 billion, lifting operating margins by 370 basis points to 10.7%. Net profit nearly doubled to ₹1.163 billion.
The company’s order book stands at about ₹58 billion, providing revenue visibility of roughly 18 months. Management expects to exceed its full-year margin guidance of 8.5–9% and has guided for around 30% organic revenue growth in FY26.
Syrma is also expanding into defence electronics through the Elcome acquisition, printed circuit board manufacturing with trial production expected by Q3 FY27, and solar energy solutions. The smart metering business alone is expected to contribute over ₹3 billion in full-year revenue.
Avalon Technologies has benefited from its precision-led model and global footprint. The company operates manufacturing facilities in Chennai and Bengaluru, as well as units in Atlanta and Fremont, United States.
In H1 FY26, India-based manufacturing accounted for 81% of revenue, while the US. operations contributed 19%. Revenue surged 48.7% year-on-year to ₹7.06 billion, while EBITDA jumped 98.5% to ₹680 million. Operating margins improved by 243 basis points to 9.7%, and net profit rose 158.3% to ₹390 million.
Avalon’s order book stood at ₹18.63 billion as of September 2025, with an additional ₹11.68 billion in long-term contracts, taking total visibility to over ₹30 billion. The company is also expanding into semiconductor equipment and expects commercial production of the Kavach railway safety system in the second half of FY27.
Despite their stronger operating performance, valuations remain elevated. Syrma trades at a price-to-earnings multiple of about 59x as of 18 January 2026, with return on capital employed of 11.7% and return on equity of 9.5%.
Avalon trades at around 70x earnings, with RoCE of 12.8% and RoE of 10.4% as of January 18, 2026. The EMS correction has reset expectations, but investor caution persists as pricing leaves limited margin for error.
