Emkay Global Financial's research report on Dixon Technologies
Dixon’s PAT for 3QFY23 was ~30% below consensus estimates. Sales declined 22% YoY and turned out to be the major disappointment. Consumer electronics and lighting sales declined by more than 35% YoY, and were the main segments that dragged down sales. Despite lower sales, margin came in at 4.6%, with all segments seeing better margin than in 3QFY22. Management indicated that value engineering, cost optimization and certain price hikes were the main margin drivers. FY23 sales guidance by Management has been further cut to Rs120-125bn from the Rs140-145bn guided a few months earlier. Sales guidance for FY23 at the start of the year was ~Rs170-180bn. We have built-in ~Rs120bn/Rs180bn revenue for FY23E/FY24E, with EBITDAM at ~4%. Our EPS for FY24E/FY25E stands at ~Rs71/Rs97.
Outlook
Our Dec-23 TP stands at Rs3,165/share, based on 35x (40x earlier, given lower growth rate in the medium term).
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