Electronic Manufacturing Services: Jul-Sep'26 Earnings Preview by Prabhudas Lilladher Ltd
Electronics manufacturing services (EMS) companies under our coverage are expected to post healthy YoY revenue growth of 26.0% in Q2FY27, driven by strong revenue momentum in CYIENTDL, SYRMA and AVAL, with YoY revenue growth of 27.2%, ~50% and 30.0%, respectively. We expect margins to expand by 30bps to 9.9% for the EMS universe. Overall, profit is expected to grow 8.6% YoY. We expect SYRMA to outperform in terms of both revenue and earnings growth. Looking ahead, we expect pickup in order book across companies, supported by their strategic focus on higher margin sectors and orders, which should further support margin expansion in the coming quarters.
We expect our EMS universe to register sales/EBITDA/PAT growth of 26.0%/29.6%/8.6% YoY in Q2FY27, on the back of robust order execution. We continue our positive view on EMS companies that will see healthy growth and continuous expansion in opportunity market.
EMS coverage universe to maintain healthy growth: Our EMS coverage companies focused on PCBA & box-build manufacturing (incl. AMBER’s Electronics segment) are expected to report healthy revenue growth of 29.6% YoY in Q2FY27. AMBER’s EMS business is likely to post 40.0% growth with consolidation of inorganic expansion. SYRMA’s revenue is expected to grow by ~50.0% YoY, driven by the Auto/Industrial/Consumer to grow by 70%/60%/45% YoY, contribute ~27%/25% /31% to the topline. SYRMA is likely to outperform, driven by strong revenue growth and robust earnings growth, with EBITDA/PAT rising 49.0%/66.3% YoY. EBITDA margin is expected to remain flat YoY.
AVAL is expected to grow by 30.0% YoY, with Mobility/Industrial/Clean Energy segment to grow by 21%/20%/81% YoY. CYIENTDL is expected to report revenue growth of 27.2% YoY, driven by strong growth in the Industrial (30%) and Aerospace (37%) segments. Healthy order momentum is expected to continue, supported by a book-to-bill ratio of 1.7x.
KAYNES is expected to report ~3.0% YoY revenue decline, mainly due to lower contribution from the Industrial segment, including smart metering, which accounted for ~55.0% of FY26 revenue. Smart meter revenue declined 12.0% YoY in Q1FY27 as the company reduced supplies amid high receivables and weak collections. However, order visibility remains strong. Excluding smart metering, core EMS is expected to grow ~25.0% YoY, with Automotive, IT and Aerospace expected to grow 14.3%/64.6%/~72.0% YoY. OSAT and PCB businesses are likely to start contributing from Q3FY27.
In Q1FY27, margins across the coverage universe are expected to expand by ~30bps YoY to 9.9%, AVAL /CYIENYDL/SYRMA are expected to see PAT growth of 43.2%/65.0%/66.3% YoY. However, in KAYNES PAT is expected to decline by 59.2% YoY, primarily due to margin contraction, AMBER is expected to post a PAT loss of INR 59mn
Key changes in ratings/TP: As we roll forward our TP to Sep’28E and introduce FY29 numbers, we revise our TP for all the coverage companies. Further, we upgrade our rating for KAYNES to ‘BUY’ from ‘ACCUMULATE’ and downgrade our rating for CYIENTDL to ‘REDUCE’ from ‘HOLD’ following the recent run-up in its stock price.
Please refer disclaimer at https://www.plindia.com/disclaimer/
SEBI Registration No. INH000000271
