Shares of Dixon Technologies (India) gained for the sixth session in a row, rising 1.6 percent to hit a record high of Rs 19,148.90 on December 17. This extended gains from the previous session, which saw its shares rise 3 percent after the company signed a binding term sheet to set up a new manufacturing joint venture with Vivo India.
At 10.50 AM, shares of Dixon Technologies were trading nearly 1 percent higher at Rs 18,990 on the NSE. The stock has been on a bull run in 2024 so far, clocking in over 190 percent gains year-to-date. Dixon Technologies shares have been giving positive monthly returns since February 2024, and so far in December, the stock has gained over 20 percent.
Under the recent agreement, Dixon will hold a majority 51 percent stake in the joint venture, while Vivo India, a subsidiary of global smartphone giant Vivo, will own the remaining 49 percent. The joint venture will undertake original equipment manufacturing (OEM) business of electronic devices, including smartphones. The facility will undertake part of Vivo's OEM orders of smartphones in India, and can also engage in OEM business of various electronic products of other brands.
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Moneycontrol was the first to report on April 8 about Vivo's talks with India contract manufacturers including Dixon. The joint venture between the two companies comes amidst increased scrutiny of all major Chinese smartphone companies in India, which face allegations ranging from customs duty and income tax evasion to money laundering.
"We believe that this association will bolster our manufacturing excellence and superior execution abilities and Vivo's leadership in the Indian business ecosystem. We are excited to work together to create a stronger, more diversified, and future-proof organisation," Atul B. Lall, Vice Chairman and Managing Director of Dixon said in an exchange filing.
The Vivo partnership will help Dixon strengthen its foothold in the Android smartphone ecosystem in India. "There is immense potential to further build on shared capabilities together in the future to deliver sustainable growth for the proposed venture," said Lall.
"We are delighted to sign a term sheet with Dixon, which boasts rich localised management experience and outstanding professional manufacturing prowess. The proposed joint venture will handle part of Vivo's OEM (Original Equipment Manufacturer) smartphone orders in India and may also engage in OEM business for various electronic products of other brands. This partnership will effectively complement the current manufacturing operations of Vivo India," Jerome Chen, CEO of Vivo India said.
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Motilal Oswal Financial Services said that it remains optimistic about Dixon Technologies' long-term growth prospects, even beyond the government’s Production-Linked Incentive (PLI) scheme, which is set to end in FY26. "Despite PLI ending in FY26, the mobile segment will continue to deliver healthy growth, driven by client additions, improved wallet share, and export opportunities," the brokerage said.
The brokerage firm also highlighted the company's efforts in backward integration, which are expected to support margins after the PLI period. Additionally, they believe that the company's scale-up in other segments will also support growth.
Dixon is exploring opportunities in the EV sector. The company is also in advanced talks with semiconductor brands for PCB assembly and with global ODMs to expand into servers and AI-ready data centers. These ventures, part of the PLI 2.0 scheme for IT hardware, are expected to drive incremental revenue growth once finalised.
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