Axis Securities report on Dixon Technologies
Dixon Technologies revenues grew 15% YoY to Rs 3,274 Cr, which were better than our estimates of Rs 3,094 Cr. The Gross Margins improved 62 bps YoY due to lower RM costs. The EBITDA margins improved 60 bps YoY led by operating leverage, cost optimization measures across verticals and calibrated price hikes in ODM businesses i.e Washing Machines and Lighting. The company reported a PAT of Rs 67 Cr vs. estimates of Rs 87 Cr. The Consumer Electronics segment’s (FPD TV) revenues stood at Rs 882 Cr (down 5% YoY) with Operating Margins of 3.4% up 70 bps YoY. The margin improvement was led by operating leverage and increase in ODM share in the revenues. The company will rollout, Android based solutions from Google by Q2FY24 and the Tizen operating system in partnership with Samsung by Q3FY24. Mobile Phone & EMS segment Revenues for the segment stood at Rs 1,795 Cr (up 38% YoY) with Operating Margins of 2,9% up 40 bps YoY. The company has added Intel as new customer in the mobile segment for manufacture of Feature Phones as well as Smart Phones.
Outlook
We expect Revenue/PAT CAGR of 32%/46% CAGR with EBITDA margins being maintained at ~4.24%. We value the company at 45x FY25E EPS of Rs 92 to arrive at a target price of Rs 4,140/share, which leaves a limited upside of 1% from the CMP.
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