Emkay Global Financial's report on Dixon Technologies
The production-linked incentive scheme (PLI) for mobile manufacturing, which comes with 4-6% incentives spread over five years with a minimum investment of Rs2bn spread over three years by any domestic company, should augur well for Dixon. Global brands would be keen to avail the incentives and reduce their manufacturing dependence on China. China accounts for ~47% of exported cell phones while India's share is just 1.2% of global exports. India is the fastest growing in mobile exports though. ixon is best-placed to benefit from this shift as it would gain with incremental mobile exports from India, along with global brands shifting part of their volumes for domestic market from existing vendors to avail the benefits. Management is confident on new deal wins and underlying business normalcy from Q2.
We raise our target multiple to 30x from 23x as we believe multiples will normalize once company records new deal wins. Retain Buy with a revised TP of Rs5,172.
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