Accumulate Dixon Technologies; target of Rs 2230: Dolat Capital

Dolat Capital's research report on Dixon Technologies

The Q1FY20 results were more than our estimates, and both EBDITA margins and working capital improved, due to strong performance in the consumer electronics segment. Management expects this improvement to continue. As WC improves, debt fell from `1bn to Rs700mn. We expect EPS to grow at a CAGR of 26% over FY19-21E, given strong traction with key customers in its TV and lighting business. The mobile segment should also grow with addition of new customers. Given the better-than-expected Q1 results, we increase our FY20 estimates for sales/PAT by 6%/9% YoY.

Outlook

We upgrade the stock to Accumulate, from Reduce, with a TP of `2,230 valuing it at 22x for FY21E.