Stocks to Buy: Global brokerage firm JP Morgan has cut the target prices of both the leading companies in the electronic manufacturing services (EMS) sector – Dixon Technologies and Kaynes Tech. However, it has maintained its overweight rating on both these stocks. The brokerage believes that despite near-term challenges, the business fundamentals of these companies remain strong in the long term.
JP Morgan has reduced its target price for Keynes Technology by 20 per cent to ₹6,100, from ₹7,550 earlier. Despite this, this new target price suggests an upside potential of about 60 percent from current levels. The brokerage says Kaynes’ annual revenue growth could be around 30 per cent due to strong demand in the automotive and industrial verticals.
However, the company may have to reduce its revenue guidance for FY26 from ₹4,400 crore to ₹4,000 crore due to possible delays in the ‘Kavach’ programme. However, due to the contribution of smart meter business, EBITDA margin is expected to improve by about 130 basis points to 15.5 percent.
In the case of Dixon Technologies, JP Mourning has reduced the target price by a huge 30 percent from ₹ 19,600 to ₹ 13,700. The new target price shows a potential upside of about 15 percent from the current price.
According to the brokerage, Dixon Tech’s annual revenue growth may remain flat for now due to last year’s high base. Additionally, rising mobile phone prices due to rising memory prices have impacted consumer demand, which is reflected in downward pressure on mobile volumes. However, due to cost control and operational efficiency, the company’s margin is likely to improve by about 20 basis points to 3.9 percent.
Earlier this week, brokerage firm Jefferies had also cut the target prices of both these EMS shares, but it also maintained its ‘Buy’ rating. At the end of trading on Wednesday, shares of Dixon Technologies closed at ₹11,780 with a gain of 0.5 per cent. Whereas Kaynes Technology shares closed at ₹3,834, up 1.1 per cent.
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