Electronics companies' shares slide as Dixon show disappoints
electronics manufacturing services (EMS) firms were among the top laggards on Tuesday after the third-quarter results of Dixon Technologies, one of the country's largest players in the segment, disappointed investors.
Dixon shares plunged 13.9%, Kaynes Technology tumbled 9.7%, Amber Enterprises slumped 7.6%, Syrma SGS Technology declined 4.7% and PG Electroplast fell 6% on Tuesday.
«Dixon's Q3 numbers were slightly below expectations on a quarterly basis and the stock has been trading at an extremely high valuation which led to a fall on Tuesday,» said Apurva Sheth, head of research at Samco Securities. «Other EMS companies like Kaynes and PG Electroplast also declined as Dixon is the leader in the space and the market was not happy with its numbers which rubbed off on other stocks as well.»
The industry has been a Dalal Street favourite in recent years, thanks to rapid growth fuelled by demand for its products for manufacturing smartphones to consumer goods. All EMS shares, except for Syrma, jumped 78% to 290% in the past year as against the 11.7% upmove in the Nifty 500 index
«Since the sector has moved up sharply in the past year, the room for disappointment is lower, because of which any disappointment triggers a sell-off,» said Siddhartha Khemka, head of retail research at Motilal Oswal Financial Services. «But in our view, EMS remains a good high growth-high valuations sector and since there is no impact on order book or growth, our outlook remains positive.»
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