Shares of Dixon Technologies shot up 10 percent to hit a 52-week high of Rs 9,062 in early deals after the stock was awarded a rating upgrade by global brokerage firm Morgan Stanley. The brokerage upgraded the stock to an 'equal-weight' from the earlier 'underweight’ call.
The brokerage firm assigned a price target of Rs 8,696 apiece for the stock to reflect an upside potential of a little over 5 percent from the stock's closing price in the previous session. It is worth noting that the stock has already surpassed the price target guided by Morgan Stanley.
Morgan Stanley also projects an earnings CAGR (compound annual growth rate) of 42 percent for Dixon Tech during FY24-28, which stood as the main premise for the brokerage's upgrade of the stock.
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Furthermore, the brokerage noted that Dixon Technologies has secured significant mobile customers over the past six months.
The company is planning to allocate $30 million towards manufacturing display modules for mobile devices. However, Morgan Stanley also raised concerns regarding the company's ability to provide guidance and maintain low working capital levels.
Dixon Technologies fell short of the Street's estimates for the January-March quarter, dragged by a 110 basis points on-year contraction in margins. This contraction was brought about by the proportion of low-margin mobile and EMS businesses increasing to 66 percent from 46 percent earlier in the quarter.
Aside from that, the company reported a 25 percent on-year jump in its net profit at Rs 98.5 crore for the fourth quarter of FY24.
The electronics manufacturing major's revenue grew 52 percent to Rs 4,658 crore against Rs 3,065 crore in the corresponding period of the preceding fiscal.
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