Buy Dixon Technologies; target of Rs 11,200: Dolat Capital Market

Dolat Capital Market's research report on Dixon Technologies

Sales came in at Rs16.3bn, +17%yoy while EBIDTA came in at Rs894mnn, +36%yoy and PAT came in at Rs523mn +22% yoy, all better than expectations as detailed in Exhibit 4. In terms of segment, consumer electronics grew 30% while rest grew in range of -9% to 4%. EBIT margins were up 130bps for lighting and 600bps for mobiles. Under the PLI, Dixon will see incremental eight-fold jump in its mobile revenues (at the cap revenue for incentives) in FY22. Dixon will do a cumulative investment of Rs2bn, at Rs500mn each year till FY25. This should drive a sales/EBIDTA/PAT CAGR of 44/37/44% over FY20-23E for the company.

Outlook

Dixon has multiple growth options including upcoming opportunities in electronic manufacturing, apart from mining existing customers/products. Strong customer addition, diversification and fungibility of manufacturing are its strengths We continue to like the structural story and Maintain our Buy rating with a TP of Rs11200, valuing the stock at 42x Sep 22E.