Sharekhan's research report on Dixon Technologies
Consolidated Q4FY23 performance was strong as operating profit/net profit grew by 32%/28% y-o-y, respectively, led by strong margin improvement in all its key segments. Management expects Rs. 6,000 crore revenue (lower than earlier guidance) from the mobile division as two key customers will be added in FY24. Healthy volume growth in TV/washing machines and new product launches in lighting shall aid revenue growth. OPM are likely to expand by 20-25bps owing to operating leverage, backward integration and increase in revenue contribution through ODM solutions in consumer electronics and lighting segments.
Outlook
We have built in revenue/earnings CAGR of 27%/39% over FY23-FY25E. Currently, the stock trades at ~66x/~45x FY24/FY25E EPS. We believe ramp up in its mobile division holds the key to growth. We maintain Hold on Dixon with a revised PT of Rs 4,050 as we believe current valuations offer limited upside and investors should await a better entry point.
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