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Last Updated : Sep 21, 2020 02:39 PM IST | Source: Moneycontrol.com

Buy Dixon Technologies (India); target of Rs 11,056: YES Securities

YES Securities is bullish on Dixon Technologies (India) has recommended buy rating on the stock with a target price of Rs 11,056 in its research report dated September 18, 2020.

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YES Securities' research report on Dixon Technologies (India)


DIXON Technologies (DIXON), India’s largest EMS player is currently in a sweet spot given a confluence of rising demand, import substitution and favorable regulatory support at the same time. The company is preparing for aggressive scale‐up across product segments by investing in increasing management bandwidth, adding export markets as a key growth engine and continuously increasing the value addition in products like lighting, washing machines and now televisions. Fungible capacities, backward integration, focus on ODM solutions vs OEM and continued addition of MNC clients have been key growth enablers behind driving a 30% revenue and 56% PAT growth over FY15‐20. Further, an asset‐light balance sheet, low WC cycle, disciplined capital investments with 18 months payback make it an attractive and scalable business. After establishing a dominant presence in lighting, company is eyeing a similar positioning in TVs, WMs and mobiles. High asset turns and low capex requirement should take ROCE above 40% despite an expected revenue and PAT CAGR of 35%/39% over FY20‐25E. Given the sharp run‐up, further upside is dependent on the company getting one or two mobile PLI licenses, which can be transformational.


Outlook


We initiate coverage with BUY with a PT of Rs 11,056 based on 32x FY23E earnings (factoring in one PLI license), which would increase to Rs 13,763 in case the company gets both.


For all recommendations report, click here


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First Published on Sep 21, 2020 02:39 pm
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