Electronics stocks need a spark of profit for D-St vibe

Mumbai: JP Morgan said 2026 will be a decisive year for India's electronics manufacturing services (EMS) sector, warning that stocks face a "litmus test" after a sharp underperformance in 2025.

The brokerage said that any sustained recovery of these shares will now hinge on a revival in companies' profitability.

"Stocks seem to be pricing in most of the negatives and hence for a rally from here on, companies will have to showcase revenue, margin and cash flow numbers for investor confidence to come back," said JP Morgan in a note to clients. The brokerage is 'overweight' on Syrma SGS Technology, Kaynes Technologies and Dixon Technologies, while 'neutral' on Amber Enterprises and Cyient DLM and 'underweight' on Avalon Technologies.


In the past year, Kaynes shares tumbled 47%, Cyient fell 36%, Dixon dropped 29% and Amber declined 16%. Syrma rose 20%, while Avalon was up less than 2%.

JP Morgan said the outlook for EMS stocks in 2026 hinges on three key triggers: a possible extension of the mobile PLI (performance-linked incentives) scheme, the expected rollout of ISM (India Semiconductor Mission) 2.0, and progress on the India-US trade deal.