Emkay Global Financial's research report on Dixon Technologies
We believe there are multiple enduring mid-to-long term drivers yet to be baked-in, namely: a) further domination of the rising smartphone assembly opportunity (we expect ~70-75% incremental share for Dixon, taking overall share to ~44% by FY35E vs ~25% now; ~30-35% share priced-in); b) similar opportunity in IT hardware aided by PLI, with Dixon's component foray underpinning its 'right-to-win' in both; c) sharp margin improvement amid aggressive backward integration intent/actions (also opens up third-party sales, exports); d) optionality from Industrial PCBs/auto electronics (potential ~Rs4trn market by FY35E; not built-in). We build-in 20%/40% FY25E-35E sales/EPS CAGR (FY27E EPS ~17% above Consensus’, amid accelerated share gains in smartphones, backward-integration benefits) with sustained high RoCE and cash flows; we believe robust prospects justify the premium valuation.
Outlook
We initiate coverage on Dixon Technologies (Dixon) with BUY and DCF-based TP of Rs 20,000 (implied Dec-26E EV/EBITDA of ~41x). With management style centered around promoting entrepreneurship and strong execution within the organization, and by closely aligning itself with India’s global manufacturing hub ambition in consumer electronics, Dixon has, over time, successfully gained leadership across verticals and continuously expanded into adjacencies.
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