PL Capital Sees Margin Surge for EMS Players in Q1, Avalon and Kaynes Lead Charge
- 4th July 2025
- 06:00:00 PM
- 4 min read
Mumbai | July 4 – India’s Electronic Manufacturing Services (EMS) sector is poised for a healthy Q1FY26, with moderate revenue growth but robust margin expansion, as players pivot towards high-margin segments and improve operational efficiencies, according to PL Capital’s report
While the topline is expected to see single-digit growth of 7.5% YoY, the sector is likely to report a ~390 basis point improvement in EBITDA margins, translating into 59% YoY PAT growth for PL’s EMS coverage universe.
“Despite a seasonally soft first half, the EMS sector is seeing structural tailwinds from clean energy, industrial, and aerospace demand,” said Praveen Sahay, Senior Analyst, PL Capital. “This, coupled with operational discipline, is driving a healthy expansion in profitability even as revenue growth remains modest.”
Avalon and Kaynes to Drive Growth
Among PL Capital’s EMS coverage, Avalon Technologies and Kaynes Technology are expected to be the key drivers of growth in Q1FY26.
Avalon Technologies is projected to post a 30% YoY revenue growth to ₹2,593 million, supported by strong performance in its mobility (+50%), industrial (+35%), and clean energy (+30%) segments. The company’s EBITDA margin is seen expanding by 740 bps to 9.6%, helping it swing back to profit with an estimated PAT of ₹124 million compared to a loss in the same quarter last year.
“Avalon’s focus on high-margin segments, coupled with operational efficiencies, is enabling a sharp turnaround in profitability,” PL Capital noted.
Kaynes Technology is expected to report a robust 50% YoY revenue growth to ₹7,559 million, driven by solid execution in automotive (+35%), industrial (+65%), and aerospace (+45%). EBITDA margins are likely to improve by 120 bps to 14.5%, with PAT projected to rise by 22% YoY to ₹622 million.
“Kaynes continues to benefit from the expanding opportunity landscape in India’s EMS sector, supported by strong execution across high-growth verticals,” said Rahul Shah, Analyst, PL Capital.
Syrma SGS: Revenue Dip but Margin Gains
Syrma SGS Technology is projected to see a 15% YoY revenue decline to ₹9,886 million, attributed to a strategic reduction in low-margin consumer segment exposure. However, margins are expected to expand by 420 bps YoY to 8%, driving a 123% YoY surge in PAT to ₹454 million.
“Syrma’s focus on auto, healthcare, and industrial segments is paying off with improved margins, even as topline moderates temporarily,” PL Capital stated.
Cyient DLM: Mixed Quarter
Cyient DLM is expected to post 7% YoY revenue growth to ₹2,760 million, reflecting the end of a key BEL order offset by gains from its Altek acquisition. Medtech and industrial segments are likely to see robust growth of 200% and 75% YoY, respectively. However, higher fixed costs are expected to weigh on profits, with PAT estimated to decline 39% YoY to ₹64 million, despite a marginal EBITDA margin improvement to 8%.
“While near-term earnings for Cyient DLM are under pressure due to project transitions, the structural opportunity in medtech and industrial remains intact,” said Sahay.
Financial Snapshot: Q1FY26 Estimates
| Company | Sales (₹ mn) | YoY Growth | EBITDA Margin (%) | PAT (₹ mn) | YoY PAT Growth |
| Avalon Technologies | 2,593 | +30% | 9.6% (+740 bps) | 124 | Turnaround |
| Kaynes Technology | 7,559 | +50% | 14.5% (+120 bps) | 622 | +22% |
| Syrma SGS Technology | 9,886 | -15% | 8.0% (+420 bps) | 454 | +123% |
| Cyient DLM | 2,760 | +7% | 8.0% (+20 bps) | 64 | -39% |
PL Capital View
PL Capital maintains the following ratings on its EMS coverage universe:
- Avalon Technologies: Accumulate (TP: ₹927)
- Cyient DLM: Accumulate (TP: ₹546)
- Kaynes Technology: Hold (TP: ₹6,068)
- Syrma SGS Technology: Hold (TP: ₹625)
“EMS players are in a structurally strong position with the China+1 shift and domestic policy support,” said Shah. “However, investors should monitor near-term valuations and execution capabilities to capture the sector’s potential sustainably.”
Outlook: EMS Sector to Remain in Focus
The upcoming Q1FY26 results will be crucial for investors tracking India’s electronic manufacturing growth story, particularly in light of government PLI schemes and the global supply chain reorientation.
Despite modest topline growth, margin resilience is set to drive strong bottom-line performance across EMS players, reinforcing the sector’s position as a key pillar in India’s manufacturing and export growth ambitions.
Those tracking Avalon Technologies, Kaynes Technology, Syrma SGS Technology, and Cyient DLM will find Q1 results critical in gauging order book strength, margin sustainability, and their positioning across high-value verticals in the evolving global manufacturing landscape.
For a detailed financial breakdown, segmental growth drivers, and PL Capital’s complete take on India’s Electronic Manufacturing Services sector, click here to view the full report.
PL Capital
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.
