Buy Dixon Technologies; target of Rs 4960: Sharekhan

Sharekhan is bullish on Dixon Technologies has recommended buy rating on the stock with a target price of Rs 4960 in its research report dated December 22, 2022.

Broker Research

December 23, 2022 / 14:33 IST

Sharekhan's research report on Dixon Technologies

In our interaction with Dixon, management highlighted near-term headwinds in terms of lower volume offtake post the festive season in TVs and mobiles. Further, COVID-lockdowns in China may disrupt the supply chain although for a brief period. The company is confident of strong long-term growth given new customer additions in key product categories, improving performance of lighting and consumer electronics businesses and margin expansion. Ramp-up of high margin original design manufacturer (ODM) products, liquidation of high-cost inventory, cost optimisation and a fall in input prices, would improve profitability.

Outlook

A healthy balance sheet, low working capital and strong revenue/PAT CAGR of ~31%/~47% over FY22-25E justify its rich valuation. Recent correction is a good buying opportunity for long-term investors. We retain a Buy on Dixon Technologies (Dixon) with an unchanged PT of Rs. 4,960.

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