Buy Dixon Technologies; target of Rs 20,500 : Motilal Oswal

Motilal Oswal is bullish on Dixon Technologies recommended buy rating on the stock with a target price of Rs 20,500 in its research report dated January 21, 2025.

Broker Research

January 21, 2025 / 11:17 IST

Buy

Motilal Oswal's research report on Dixon Technologies

Dixon Technologies (Dixon) reported better-than-expected revenue and EBITDA, driven by strong performance of the mobile and EMS segment, while PAT stood lower than our estimates on higher depreciation, interest, and minority interest. The company’s revenue/EBITDA jumped 117%/112% YoY for 3QFY25. The mobile and EMS segment continues to benefit from improved volumes from customers, while revenues of consumer electronics, lighting, and home appliances were impacted by weak demand during the quarter. The company is continuously focusing on increasing backward integration and expects display manufacturing to begin from 1Q/2QFY26. We expect incremental margin from the display facility to offset contraction in margins due to the PLI scheme ending by FY26.

Outlook

The company is also exploring entry into display fabs and is awaiting government guidelines from the expected component PLI scheme. We downgrade our earnings estimates for FY25/26 by -8%/-4%, while FY27 earnings estimates are upgraded by 7% to factor in higher mobile segment revenues and lower consumer electronics revenues. We increase our DCF-based TP to INR20,500 on March’27 estimates.. Reiterate BUY.

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