Anand Rathi is bullish on Dixon Technologies has recommended buy rating on the stock with a target price of Rs 9834 in its research report dated August 05, 2020.
Anand Rathi 's research report on Dixon Technologies
While Q1FY21 was hurt by the lockdown, Dixon continues to lead the government’s self-dependence measures to manufacture consumer durables. It is well placed to benefit from the PLI scheme, for which submissions have been made. The recent notification putting television imports in the restricted category also augurs well for Dixon and supports customer additions. Annual imports in product categories where Dixon operates are `1.38trn (at an 11% CAGR over FY11–19) offers a diversified opportunity which can be addressed effectively by only a few manufacturers in India. Expansion of Reliance Jio can further increase Dixon’s addressable set-top boxes and be another `10bn opportunity waiting to unfold in coming years.
At the CMP of `7,957, the stock trades at 47x/32x the FY22e/ FY23e EPS of `169/246. Key risks to our positive stance would include muted demand for consumer durables for a longer period. Regional lockdowns can create logistical issues, expected to be temporary.
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