Nomura Suggests Buying Dixon, Samvardhana as US Tariffs Boost Electronics Exports

New Delhi (The Uttam Hindu): Foreign brokerage firm Nomura has maintained a ‘Buy’ rating on Dixon Technologies and Samvardhana Motherson, citing that the evolving U.S. tariff strategies could significantly boost India’s electronics exports, particularly in the mobile phone sector. Nomura has kept its target prices unchanged at Rs 13,911 for Dixon Technologies and Rs 128 for Samvardhana Motherson International.

However, the shares of both companies have fallen approximately 6% in the past month, while the BSE Sensex also declined by about 4% during the same period amid a broader market correction. Despite this, analysts believe India is well-positioned to capitalize on the changing dynamics of global supply chains and the potential for reciprocal tariffs between the U.S. and India.

The U.S. has long advocated for reciprocal tariffs on Indian goods, claiming unfair trade practices, and the Indian government is considering various strategies to mitigate this, including a potential bilateral trade agreement. This comes as India’s electronics exports to the U.S. have surged in recent years, growing from $2.5 billion in FY20 to approximately $11 billion in FY24. While India still accounts for only about 2% of total U.S. electronics imports, its position is improving as it reduces import duties on key components like printed circuit board assemblies (PCBAs), cameras, and displays.

The proposed tariff changes could lead to the U.S. implementing reciprocal tariffs, but analysts believe the impact on India’s electronics exports would be minimal. India's competitive edge, especially in mobile phone manufacturing, is expected to grow as global supply chains shift away from higher-tariff countries like China. Analysts suggest that the U.S.'s ongoing tariffs on Chinese and Mexican imports could drive more manufacturing to India, benefiting Indian electronics firms.

Global brands such as Apple and Samsung are already increasing their production reliance on India, with projections suggesting that by FY25, India will account for 23% of Samsung’s and 15% of Apple’s global mobile production. As a result, India’s smartphone exports could reach $20 billion by FY25 and potentially $70 billion by FY30.

Within this context, Dixon Technologies and Samvardhana Motherson are well-positioned to benefit from these shifts. Analysts predict that Dixon will see strong growth in mobile exports from brands like Motorola and Google, while Samvardhana Motherson will benefit through mobile display components. As the U.S. tariff strategy evolves and India’s role in global electronics supply chains expands, these companies are expected to experience significant upside potential in the coming years.

The shift in global manufacturing and the increasing reliance on India for mobile production could further accelerate India’s rise as a key player in the global electronics market, positioning companies like Dixon and Samvardhana Motherson for substantial growth.