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Last Updated : Nov 14, 2019 11:26 AM IST | Source: Moneycontrol.com

Dixon Tech share price jumps 9% after Q2 earnings, to surpass 40% FY20 revenue growth guidance

The lighting products, LED TVs and semi-automatic washing machines manufacturer and supplier reported highest ever quarterly sales in Q2FY20, driven by consumer electronics segment.

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Dixon Technologies share prices gained 9 percent intraday on November 14 after healthy earnings growth in Q2FY20 and strong management commentary.

The stock touched a fresh 52-week high of Rs 3,276 on the BSE. It rallied more than 60 percent in last three months amid consistent earnings growth and was quoting at Rs 3,229.80, up Rs 230.35, or 7.68 percent at 1058 hours IST.

"We will surpass our earlier guidance of 40 percent revenue growth for FY20. In fact, we are looking at 50 percent revenue growth for FY20," Saurabh Gupta, Chief Financial Officer told CNBC-TV18.

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He said the company has been adding customers across all the segments. "Additional capacity and exports will drive lighting business. Cash conversion cycle is zero days currently," it added.

The lighting products, LED TVs and semi-automatic washing machines manufacturer and supplier reported highest ever quarterly sales in Q2FY20, driven by the consumer electronics segment.

Consolidated revenue during the quarter grew by 89.8 percent year-on-year to Rs 1,402 crore and profit increased 162 percent YoY to Rs 43 crore due to lower tax cost (down 35 percent), but finance cost was higher at Rs 93 crore in Q2 against Rs 49 crore YoY.

Consolidated earnings before interest, tax, depreciation and amortisation (EBITDA) shot up 92.6 percent year-on-year to Rs 63.1 crore and margin expanded 10bps YoY to 4.5 percent in the quarter ended September 2019.

Consumer electronics segment registered a 105 percent growth YoY at Rs 740 crore, lighting segment grew by 49 percent YoY to Rs 280 crore and home appliances business increased 34 percent YoY to 140 crore while mobile phone segment (including the effect of 100 percent stake in Padget Electronics) showed 204 percent growth YoY to Rs 190 crore in Q2.

Brokerages also remained positive on the stock after stellar earnings performance and expect a double-digit return.

"We remain positive on Dixon Technologies and expect a potential upside of 19-21 percent as the company delivered a healthy set of Q2FY2020 numbers and is likely to report robust revenue and earnings CAGRs of 19.6 percent and 33.7 percent, respectively, over FY2019-FY2022," Sharekhan said.

Management guided overall revenue growth of 30-35 percent and EBITDA growth ahead of revenue growth owing to margin expansion led by economies of scale for FY2020.

"We raised FY20/21E EBITDA by 8 percent/10 percent as we incorporate higher growth in the revenues of consumer electronics and lighting, along with a turnaround in servicing business," said Emkay which maintained buy call on the stock with a revised target price of Rs 3,605.

Management remained confident on further adding new customers in TV and Washing Machine categories soon. Sustained growth from existing customers and new additions should continue to drive revenue growth momentum, said Emkay.

Disclaimer: The above report is compiled from information available on public platforms. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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First Published on Nov 14, 2019 11:26 am
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