Leading brokerages have taken note of electronics manufacturer Dixon Tech's strong Q1FY25 performance but shared concerns over execution risks and challenges in the non-mobile segments of IT hardware and consumer electronics.
CLSA has downgraded shares of Dixon Technologies (India) to 'Hold' while raising the target price on the stock to Rs 11,400 per share. The brokerage added that mobile phone manufacturing will remain a key focus for Dixon, and anticipates significant growth from the ramp-up of existing contracts and onboarding of new clients.
At 11.13 AM, Dixon Tech's shares traded nearly 2 percent higher at Rs 12,197. The company's share price has doubled over the past six months.
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Dixon Technologies' reported a robust June quarter with the consolidated net profit surging 109 percent YoY to Rs 140 crore and revenue rising 101 percent YoY to Rs 6,588 crore. The revenue from Mobile and EMS division rose to Rs 5,192 crore, up 189 percent from the year ago period. However, Consumer Electronics & Appliances saw a de-growth of 3 percent. The Home Appliances and Lighting segment saw modest revenue rise of 18 percent and 2 percent YoY, respectively.
Nuvama said going forward, Dixon's mobile segment is likely to drive revenue from Rs 9,300 crore in FY24 to Rs 34,200 crore by FY26, potentially pushing total revenue beyond Rs 45,000 crore. This transition to a mobile-centric model will result in lower margins due to the mobile segment's lower profitability of 3–3.3 percent, Nuvama added, retaining its 'Hold' on Dixon Tech with a target of Rs 12,000.
Also Read | Dixon's Atul Lall confirms CCI nod for Transsion deal, will start making Google Pixel from September
Kotak Institutional Equities added that Dixon Tech plans to sign one new mobile customer - potentially from the BBK group - which could accelerate the company’s goal of reaching 4 crore smartphone units. The company also aims to capture 50-60 percent of the 9 crore outsourced smartphone market.
Kotak had a 'Sell' rating on the stock.
Dixon Tech's EBITDA margin rose 90 percent YoY to Rs 256 crores in Q1 FY25, however, its EBITDA margin contracted by 20 basis points to 3.9 percent.
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