Dear reader, as 2025, a year of global tumult and volatility, rolled by, Mint's reporters and columnists looked around the corner on what is coming in 2026—to help you know what to expect and prepare for it. Tell us what you think at feedback@livemint.com.
New Delhi: India Inc’s push from low-value, high-volume electronics assemblies to designing and selling high-margin electronics components is expected to pick up pace this year. The country’s top five electronics companies are expected to spend increasingly on strategic acquisitions of smaller companies with niche specializations in areas such as electronic circuits, sensors, displays, connectors and more—as they look to generate larger profit margins and increase their worth for shareholders.
The reason for this is simple. India’s top five electronics companies include Tata Electronics, Dixon Technologies, Amber Enterprises, Kaynes Technology and Syrma SGS. Tata Electronics is the sole privately held firm of these five. Cumulatively, these companies generated ₹1.22 trillion ($13.6 billion) in operating revenue FY26, and, according to analysts, are expected to grow at least 30% year-on-year to reach ₹1.6 trillion ($17.7 billion) FY26—before further growth is anticipated in the next fiscal.
The large revenue figure, however, is accompanied by very slim profit margins. In FY25, the five firms generated a cumulative consolidated net profit of ₹1,599 crore ($179 million)—a meagre 1.3% of the total business these five companies generated. This margin, to be sure, comes after all of the above five were recipients of some form of incentives from the ministry of electronics and information technology (Meity), such as production-linked incentives for smartphones and IT hardware, incentives for semiconductor facilities and design, and incentives for making electronics components.
As a result of slim profits, electronics manufacturers experienced a slowdown in the bourses for the first time since their listing history. Dixon’s shares are down 26%, Amber’s shares are down 13%, and Kaynes’ shares are down 45% since 1 January 2025. Syrma SGS was the sole company to return profits, with its share price rising 18% in CY2025. The benchmark 30-share BSE Sensex index rose 8% in this duration.
Margin pressure rising
Companies are thus on the lookout for active acquisition opportunities. Jasbir Singh Gujral, managing director of Syrma SGS, said that the company is “evaluating a number of acquisition proposals on the table, with nothing finalized yet.”
“We do look at acquisitions, but we do so when we spot a strategic opportunity to add a core capability that we do not have yet. As and when we do, we’ll pursue them on merit. There’s no set target, but expanding our capabilities is a core part of increasing profitability in the electronics business today,” Gujral told Mint.
Emails with queries sent to Amber Enterprises did not receive responses until print time. Tata Electronics declined to comment.
Analysts told Mint that after a mixed 2025, 2026 is likely to be the year when companies hope to regain shareholder confidence. On this note, acquisitions are said to be the right way forward.
Mint’s analysis of exchange filings, analyst notes, and annual reports showed that since 1 April, the five companies mentioned above have announced a total of 17 acquisitions. Each of them added expertise in strategic niches, such as designing electronic components for laptops, manufacturing smart metres, printed circuit boards (PCBs), and other components, as well as inverters, defence-grade electronics, and more.
“This is a tried and tested formula, because the other way ahead is for electronics companies to invest a sizeable chunk of their revenue into research and development (R&D), find core engineering talent capable of doing such R&D, build facilities for the same, and have robust access to funds and the supply chain in case they run out of means. This is far riskier than the acquisitions strategy, where companies gain access to market-proven technologies and build upon them by integrating the new acquisitions into their existing product lines,” said Harshit Kapadia, vice-president at brokerage Elara Capital.
Saurabh Gupta, director - finance and group chief financial officer of Dixon Technologies, told Mint that the company will look for strategic acquisitions in sectors such as printed circuit board assemblies, in line with how the company has added manufacturing capabilities in display and camera modules.
"We're open to strategic acquisitions in sectors that we’re not present in. For instance, PCB assembly is a core electronics business. Our competitors have done well there, and we’re looking at acquisitions there, too. We’ll also evaluate acquisitions in automotive electronics, industrial electronics, aerospace and defence electronics verticals, driven by a greater push for local sourcing. As long as the acquisition opportunities come organically and at decent valuations, we’ll certainly go for it," Gupta added.
Jairam Sampath, whole-time director and chief financial officer at fellow EMS firm Kaynes Technology, told Mint that the company "will scale up the strengths in existing businesses and capacities as the first steps," rather than pursue acquisitions. However, he also added, "Of course, we do consider each opportunity on its merits. If the prospects for a new opportunity are found to be great in developing long-term growth with good profitability, we may look at it."
Strategic niche acquisitions
Ankush Wadhera, managing director and partner at consultancy firm BCG India, added that with industries such as semiconductors being relatively unknown for India’s electronics manufacturing services sector, acquisitions are inevitable as the first chip facilities start becoming operational in 2026.
“As chip packaging and testing plants come live, EMS companies will have an opportunity to upscale and upgrade their offerings—and realize domestic value from these plants. To do this, localizing core sub-components, such as circuitry, resistors, shells, coils and wiring, will offer significant margin and profit generation opportunities, and also help the electronics manufacturers grow in size,” Wadhera said.
- Despite revenues crossing ₹1.2 trillion, the top five electronics firms are operating on a razor-thin 1.3% net profit margin.
- Companies have completed 17 acquisitions since 1 April, favouring buyouts over the riskier, capital-intensive path of internal R&D.
- Poor margins have led to a massive sell-off in electronics stocks, with some companies like Kaynes losing nearly half their market value this year.
- The acquisition spree targets ‘high-value’ components like sensors, printed circuit boards, and specialized circuitry to move away from simple assembly.
- The operationalization of India's first semiconductor plants in 2026 is expected to be the primary catalyst for the next wave of local value addition.