India's electronics manufacturing projected to double in next five years: ICICI Direct

The first quarter earnings season in the Indian stock market is almost over, with most major listed companies having already announced their results. According to an analysis by the brokerage firm ICICI Direct, the top four sectors that reported strong numbers in the first quarter are Capital Markets, Consumer Durables, Electronic Manufacturing Services, and Waste Management.

For the Capital Markets sector, ICICI Direct highlighted that companies delivered strong results, driven by rising volumes, orders, and client additions. The Asset Management Company (AMC) sector also saw growth, supported by buoyant net equity inflows and record-high SIP flows.

The analysis pointed out that the rising middle class and increasing financial inclusion are shifting household savings towards investment products and financial markets, creating a significant opportunity for growth. In the Consumer Durables sector, ICICI Direct noted that the exceptionally hot summer season led to strong growth during the quarter.

Rising temperatures significantly boosted the demand for air conditioners, resulting in strong topline growth for consumer durables firms. The margins of the consumer durables sector expanded due to lower input costs, an improved product mix, and operational efficiency.

The sector's growth drivers include low penetration, a growing middle-class population with higher disposable incomes, and rapid urbanization. For Electronic Manufacturing Services (EMS) companies, the analysis indicated strong demand across sectors like electric vehicles (EVs), aerospace, railways, and consumer durables (such as air conditioners and washing machines). 

ICICI Direct stated, "India's electronic manufacturing is projected to double in the next five years, rising from USD 125 billion to approximately USD 250 billion. The government targets USD 100 billion in electronics exports by FY30, providing a significant boost to the sector. Policies like PLI schemes and tax incentives are driving substantial benefits for the industry.

"Finally, the Waste Management sector recorded strong volume growth during the quarter. There is a growing shift towards formal and organized recycling, with increasing emphasis on recycled materials for lead, plastics, and tyres to meet Extended Producer Responsibility (EPR) regulations.

With only 30 per cent of the 75 per cent recyclable waste being recycled in India, the sector presents huge growth opportunities. ICICI Direct noted, "The industry is poised for significant growth, fueled by increasing environmental awareness and regulatory pressures."