JP Morgan has identified 2026 as a decisive year for India's electronics manufacturing services ( ems ) sector, warning that stocks in this space face a critical "litmus test" following their sharp underperformance throughout 2025. The global brokerage emphasized that any sustained recovery in these shares will now depend entirely on companies' ability to revive their profitability metrics.

Profitability Key to Recovery

According to JP Morgan's analysis, the sector appears to have already priced in most negative factors, creating a foundation for potential recovery. However, the brokerage stressed that companies must now deliver tangible improvements in their financial performance to restore investor confidence.

"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," JP Morgan stated in its note to clients.

Stock Performance and Ratings

The EMS sector witnessed significant volatility in 2025, with most stocks experiencing substantial declines. JP Morgan's current positioning across the sector reflects this mixed performance landscape:

The brokerage maintains an overweight stance on Syrma SGS Technology, Kaynes Technologies, and Dixon Technologies, despite the challenging performance of some of these stocks. Meanwhile, it holds neutral positions on Amber Enterprises and Cyient DLM, and remains underweight on Avalon Technologies.

Critical Catalysts for 2026

JP Morgan identified three key triggers that will determine the EMS sector's trajectory in 2026:

• Mobile PLI Scheme Extension: The potential continuation of performance-linked incentives for mobile manufacturing
• ISM 2.0 Rollout: The expected launch of India Semiconductor Mission 2.0
• India-US Trade Progress: Developments in bilateral trade negotiations between India and the United States

These factors are expected to significantly influence the sector's growth prospects and investor sentiment moving forward. The brokerage's analysis suggests that successful navigation of these catalysts, combined with improved operational metrics, will be essential for the sector's recovery and long-term growth trajectory.

EMS Limited has announced two strategic partnerships that will expand its operational footprint across key infrastructure sectors. The company has entered into partnership agreements that position it for growth in both environmental services and construction materials.

Partnership Details

The company's partnership strategy encompasses two distinct business areas with significant market potential:

Sewage Treatment Venture

EMS Limited's collaboration with Neercare India represents the company's strategic entry into the sewage treatment sector. This partnership aligns with the growing demand for water management and environmental services across India. The sewage treatment business offers opportunities in municipal contracts and industrial wastewater management.

Concrete Business Expansion

The partnership with Gajendra Parihar focuses on strengthening EMS Limited's position in the concrete business segment. This collaboration is expected to enhance the company's capabilities in construction materials, supporting infrastructure development projects.

Strategic Positioning

By maintaining majority stakes in both partnerships, EMS Limited retains strategic control while leveraging partner expertise. The company's diversification into sewage treatment and concrete business demonstrates its commitment to expanding across complementary infrastructure sectors.

These partnerships represent EMS Limited's focused approach to business expansion through strategic collaborations that combine the company's resources with specialized partner capabilities in targeted market segments.