Q3 earnings: Dixon hit by mobile slowdown, Syrma turns cash flow positive

NEW DELHI: Dixon Technologies and Syrma SGS’s December quarter (3FY26) earnings point to growing disparities within India’s electronics manufacturing services (EMS) sector, with firms still reliant on mobile device manufacturing coming under pressure, while those with greater exposure to industrial and export-led segments are proving more resilient.

The performance of the two companies highlights the growing importance of diversification for EMS firms as cost pressures and the global slowdown in mobile devices weigh on the industry.

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Dixon Technologies reported on Thursday: ₹Operating income fell 28% sequentially to Rs 10,672 crore in 3QFY26. Net profit fell by 57% sequentially ₹321 crore. The company attributed much of this impact to a slowdown in production of mobile phones, smartwatches, audio products, laptops and telecom hardware; revenues fell 27% sequentially. ₹9,750 crore.

Syrma SGS, on the other hand, reported a 10% sequential increase in December operating income. ₹1,264 crore. Net profit exceeded ₹The first is 100 crore, growing 66% sequentially ₹110 crore, driven by exports in high-margin segments such as automotive electronics, medical electronics and defense technologies, managing director Jasbir Singh Gujral said in a post-earnings call with analysts on Friday.

Gujral said Syrma SGS turned operationally cash flow positive in the December quarter and expects net operating cash flow to increase further by March 31, 2026. Mint after the earnings call.

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This move comes as both Syrma and Dixon are actively investing in setting up new facilities to produce printed circuit boards (PCBs) and camera and display modules respectively; both companies expect them to be ready for production by FY27.

Investors responded positively to Syrma SGS in the stock markets on Friday. At the time of writing, the stock was up 5.6%. But reaction to Dixon’s earnings was muted, with its shares up 0.35% from the previous close. The 30-share BSE Sensex lost 0.48%.

Syrma outperformed while Dixon Technologies also missed street estimates. The consensus of 20 analysts surveyed by Bloomberg expected Dixon to report. ₹11,590 crore in consolidated revenue, while 16 analysts expected Syrma to report ₹1,185 crore revenue for the December quarter.

“The electronics market faces headwinds in the near term due to commodity inflation and memory price hikes. We continue to focus on building scale, bringing operational efficiencies, strengthening backward integration and diversifying the core electronics business to lead the environment,” Atul Lall, vice president and managing director of Dixon Technologies, said during a post-earnings call with analysts on Thursday.

Lall said the slowdown could be attributed to the rise in prices of memory chips worldwide as a result of most memory manufacturers’ focus on artificial intelligence (AI) chips.

“Industry reports show this sharp increase and expect further increases through 2026. Memory chips for smartphones and PCs have emerged as one of the most important items in the bill of materials, especially for lower-priced devices,” he added.

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In contrast, Syrma ended SGS 2025 on a bullish note.

“We had earlier targeted an operating margin of 8% and revised the same to 9% as exports continue to help us expand our margin while strategic segments such as automotive electronics continue to perform very well,” said Syrma’s Gujral. “We are confident of maintaining this pace as we have seen steady growth across all sectors and this diversification is helping us improve our margins and cash flow and we expect to do so in the year ahead.”

Long-term growth forecasts for the EMS sector remain unchanged, but short-term concerns could cause immediate damage, analysts said.

“Issues such as memory chip price increases and US tariff uncertainties, coupled with the slowdown in the global mobile phone market, will continue to impact companies with greater exposure to these areas,” said Harshit Kapadia, vice president at brokerage firm Elara Capital.

“Business resilience will be stronger for companies with broader exposure to various industrial electronics as well as consumer durable sectors such as laptops, where Syrma is showing strength. But until then, there may be short-term concerns due to sectoral exposure, particularly until electronic components push for each of these companies,” he added.