Shares of Dixon Technologies (India) rose nearly 6 pecent to a 52-week high of Rs 16,739 on November 29 after its wholly-owned subsidiary, Padget Electronics, announced plans to commence mass production of Google Pixel smartphones in collaboration with Compal Smart Device India for Compal's client, Google Information Services India. The production is part of a contract manufacturing agreement signed in February with Compal Smart Device India and will take place at Padget's Noida plant.
At 9.30 AM, Dixon Tech's shares were up over 4 percent at Rs 16,482. Year-to-date, Dixon Tech's stock has delivered a stellar 150 percent return, far outpacing the Nifty 50's 11 percent gain.
Nomura maintained its 'Buy' rating on Dixon Tech with a target price of Rs 18,654, implying an upside potential of 18 percent from the stock's previous closing price of Rs 15,807.
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According to Nomura, "Dixon will have a significant share of business (SOB) of the Pixel in India, especially the relatively affordable A series, which contributed around 65 percent to Pixel's India sales in 2023. In our view, while volumes are low, realisations will be significantly better at Rs 25,000 - Rs 26,000 per unit for Dixon, compared to current average realisations of Rs 9,000 per unit."
Nomura estimates that Pixel production could add Rs 15 billion to Dixon Tech's revenues by FY26, assuming a 60 percent share of business and gradual ramp-up.
Additionally, the brokerage firm believes the move positions Dixon Tech as a strong contender for premium smartphone production, particularly as manufacturers shift away from China due to geopolitical tensions.
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"Given the US-China trade war and the success of Apple in India, if Pixel shifts approximately 30 percent of its business to India, it will imply Rs 90-Rs 100 billion of potential sourcing from India and will be a sizeable opportunity for Dixon as well," Nomura said.
Meanwhile, India's Ministry of Electronics and Technology is considering a Rs 400 billion incentive package to boost local electronic component manufacturing. If approved, this could increase local value addition, especially for components like Printed Circuit Boards (PCBs), camera modules, display sub-assembly, and lithium-ion cells.
Dixon Techn reported a 264 percent year-on-year (YoY) surge in net profit to Rs 411.7 crore for the quarter ended September, including an exceptional gain of Rs 209.6 crore. The company's revenue from operations jumped 133 percent to Rs 11,534 crore.
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