Hold Dixon Technologies India; target of Rs 6170: ICICI Securities

ICICI Securities research report on Dixon Technologies India

We like Dixon’s ability to make swift changes to its business model with changing macro conditions. While it was able to ride the growth wave in white goods and durables over FY15-23, it has now successfully added multiple new customers in mobile and is on track to drive its IT hardware business. We reckon these changes shall provide strong growth tailwinds and be EVA accretive. Pointers from Q3FY24: 1) Dixon aims to capture ~40% of the mobile outsourcing opportunity (85-90mn of a total ~150mn mobiles sold in India). 2) Higher focus on backward integration is likely to drive margin expansion. 3) Positive developments on new revenue streams like PCBA in industrial electronics and IT hardware auger well.

Outlook

We raise our earnings estimates by 11.8%/13.9% for FY24/FY25 due to a strong Q3FY24 and robust order inflow. Upgrade to HOLD with a DCF-based revised TP of INR 6,170.