CLSA, HSBC raise target price on Dixon Technologies following HP India deal, see 12% upside

Over the past year, Dixon Technologies shares have jumped 140 percent.

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Electronics manufacturing player Dixon Technologies got a thumbs up from two international brokerages following its subsidiary Padget Electronics' deal with HP India to manufacture notebooks, desktops, and all-in-one PCs for HP.

Foreign broking firm CLSA said Dixon Technologies has outlined a strong near- and medium-term growth outlook. In the near-term, new customer acquisition and gaining wallet share in mobile phones is likely to drive growth.

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The brokerage maintained its hold call, but hiked its target price to Rs 12,100 per share, up from Rs 11,400 per share. Over the medium term, CLSA said the firm's focus is on raising backward integration through components manufacturing and ramping up new segments.

Some next big drivers of growth would be industrial EMS, while Dixon Technologies is looking to expand through both the organic and inorganic route if any opportunities arise. The contract manufacturing players aspires to capture around 20-25 percent of the market share in the laptop segment over the medium term.

On the other hand, HSBC reiterated its buy rating on the firm, raising its target price to Rs 14,000 apiece. This implies an upside of around 12 percent from the previous session's closing price.

HSBC noted that HP is a leading player in India's personal computer market, and the deal is value accretive for the firm. Dixon Technologies is looking to capture a significant portion of the country's IT hardware manufacturing market. Large scaling up in the mobile and IT hardware spaces will allow the company to create backward integration opportunities.

Over the past year, Dixon Technologies shares have jumped 140 percent, outperforming the frontline Nifty 50 index that has gained around 30 percent during the same time period.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.