Great prospects, investor darling over the past year but Kotak still sees 32% downside in Dixon Tech

The Dixon Tech share price has rallied 24 percent in the last three months.

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26 Aug, 2025 12:21

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With a staggering gain of 164 percent over the past year, does electronics manufacturer Dixon Technology's Ismartu acquisition have enough steam to carry forward the rally?

On April 8, the company signed a share-purchase agreement with Ismartu, a Noida-based company that makes, assembles, sells, distributes, imports and exports mobile phones and other electronics.

While Dixon Technologies' acquisition of Ismartu, which is the manufacturing arm of Transsion Holdings, at an attractive valuation will help it further expand in the domestic smartphone market, Kotak Institutional Equities has reiterated its “sell” call on the stock with a price target of Rs 5,200.

The price target is higher than the previous time but still implies a 32 percent downside from the current levels.

This is because the brokerage valuations are expensive and the target price already factors in the company's electronics manufacturing services segment (EMS), components and exports, the Kotak report said.

"We lower our FY24 earnings estimate by 8 percent and raise our FY25 and FY26 estimates by 9 and 6 percent, respectively, owing to an expected ramp-up in the mobile segment, driven by the Ismartu acquisition," Kotak analysts said.

In the December quarter, the company signed an agreement to manufacture mobile phones for Compal, a Taiwanese computer manufacturer, and its designated customers targeting the domestic Indian market. The move also holds the potential for expansion into the export market over the medium term.

Also read | India vs the world: Nifty outpaces China, Japan, Korea indices; will the outperformance continue?

Possible tie-up with BBK Group offers growth promise

China’s BBK Group, encompassing popular brands like Oppo, Vivo, Realme, OnePlus, and iQoo, which commands a market share exceeding 45 percent, is looking for local partners like Dixon, the Kotak report said.

Its plan to collaborate with local contract manufacturers reflects a strategic move to bolster domestic manufacturing capabilities. Should this collaboration materialise, Dixon stands to gain from increased volumes, potentially leading to a broader market share in the domestic mobile manufacturing sector. The partnership presents promising avenues for growth and expansion for Dixon, Kotak said in the note.

In the third quarter, the company's consumer electronics and home appliance business clocked modest revenue growth because of competitive intensity.

Lighting segment continued to face pressure due to weakened consumer demand, which resulted in on-year de-growth.

On April 10, Dixon Tech shares closed at Rs 7,828, up nearly 2 percent from the previous close on the NSE. The stock has gained 24 percent in the past three months.

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