Near-term growth & margin worries for EMS players Dixon and Amber

Brokerages prefer Amber Enterprises to Dixon Technologies in the sector

The stocks of electronic manufacturing service (EMS) players such as Dixon Technologies (Dixon) and Amber Enterprises (Amber) have seen a sharper correction than the broader markets and benchmarks, shedding 18-37 per cent since the start of May.

Lower growth in their customer segments, cost pressure, and valuations weighed on the stocks. While both have been multi-baggers over the past three years, with Dixon rising 7.5 times and Amber gaining 2.5 times during this period, the Street has a mixed view on the returns potential of the two EMS companies.

Among the near-term worries are demand and cost pressure, visible in the March