Goldman Sachs Sees Export Headwinds for Industrials in Q2FY26
Goldman Sachs has flagged early signs of export weakness emerging in Q2FY26, even as domestic demand, particularly in the Cables and Wires segment, continues to hold strong. The brokerage maintains a ‘Buy’ rating on KEI Industries Ltd., a ‘Sell’ on Dixon Technologies, and remains ‘Neutral’ on Polycab India Ltd.
Domestic Demand Remains Strong
The brokerage noted that domestic demand remains strong for Cables and Wires. Copper and aluminum prices had seen some correction in the first half of July, however since then, there was a steady increase in prices through the quarter which may have offset some de-stocking in July. However, after a strong Q1 and slowing exports, Goldman Sachs expects some moderation in the growth rates seen in the previous quarter.
Dixon Technologies Downgraded to ‘Sell’
The brokerage has downgraded Dixon Technologies to ‘Sell’. The company had earlier guided for a 15% quarter-on-quarter growth in its mobile and EMS division for Q2. However, Goldman Sachs remains unconvinced. “We expect a 4% QoQ growth in mobile and EMS division versus 15% guided by the company for Q2”, the brokerage said.
Q1 Results of Dixon Technologies
During the April-June period, Dixon Technologies’ topline or revenue from operations rose 24% to Rs 12,863 crore, compared to Rs 10,292 crore in the previous quarter ended March 31, 2025. The company’s revenue surpassed the Bloomberg estimate of Rs 12,155 crore. Ebitda came in at Rs 482 crore, significantly above the estimated Rs 389 crore, while operating margins stood at 3.8%, higher than the expected 3.2%. However, net profit declined 43% year-on-year to Rs 225 crore, in line with the Bloomberg estimate of Rs 221 crore, but down from ₹400.8 crore a year earlier.
Impact on Indian Markets
The downgrade of Dixon Technologies by Goldman Sachs is likely to have a negative impact on the stock price. However, the ‘Buy’ rating on KEI Industries Ltd. and ‘Neutral’ rating on Polycab India Ltd. may provide some support to the stock prices. Indian markets are expected to remain volatile in the near term, driven by global cues and Q2FY26 results.
Investor Sentiment
Investor sentiment remains cautious, with a focus on stocks with strong domestic demand and growth prospects. The export weakness flagged by Goldman Sachs is a concern, but the strong domestic demand in the Cables and Wires segment is a positive factor. Investors are advised to remain cautious and focus on stocks with strong fundamentals and growth prospects.
Conclusion
In conclusion, Goldman Sachs has flagged early signs of export weakness emerging in Q2FY26, even as domestic demand continues to hold strong. The brokerage has downgraded Dixon Technologies to ‘Sell’, while maintaining a ‘Buy’ rating on KEI Industries Ltd. and remaining ‘Neutral’ on Polycab India Ltd. Indian markets are expected to remain volatile in the near term, driven by global cues and Q2FY26 results. Investors are advised to remain cautious and focus on stocks with strong fundamentals and growth prospects.
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