Dixon Technologies stock up 176% in one year; check reasons here

Dixon Technologies' Q4 profit surged 24.7 per cent to Rs 98.5 crore

Dixon Tech in focus: Shares of electronics manufacturer, Dixon Technologies, rose 3.14 per cent to hit an intraday high of Rs 8,351.45 per share on Thursday, a day after the company posted robust financial results in Q4FY24.

The company's Q4 profit surged 24.7 per cent to Rs 98.5 crore. Its revenue climbed 52 per cent to Rs 4,658 crore. Ebitda also increased 17.3 per cent to Rs 183 crore, although the margin experienced a slight decline to 4 per cent.

The board of directors of the company also recommended a final dividend of Rs 5 per share of the face value of Rs 2 each, for FY24.

Meanwhile, over the past six months, Dixon Technologies' stock has jumped nearly 55 per cent, and over the span of a year, it has skyrocketed approximately 176 per cent. 

The robust growth can be attributed to various factors, including the company's expansion plans such as the establishment of a new facility in Noida. This facility will produce 1.3 million laptops for Acer, a Taiwanese PC manufacturer.

Moreover, discussions are underway between HP India and VVDN Technologies, as well as Dixon Technologies, regarding the assembly of laptops within India. 

Additionally, a report by Nuvama highlighted Dixon Tech, along with Infosys, State Bank of India (SBI), Swan Energy, HDFC Bank, and Indus Towers, as top stocks traded on the BSE and NSE, favoured by leading insurance players in India in April 2024.

Analysts noted that Dixon Technologies growth remains primarily driven by its mobile and EMS segments, with the execution of new contracts underway. However, other segments such as electronics, home appliances, and lighting showed sub-par growth.

Independent analyst Ambreesh Baliga attributes the sustained rally Dixon Technologies' stock to robust financial performance and the company's dominant market presence. However, Baliga anticipates margins to persist at current levels for a few quarters.

Dixon Tech has forecasted a major increase in mobile revenue for FY25, with plans for growth in other businesses through backward integration and new product launches. 

Consequently, analysts at Nuvama have raised their earnings estimates for FY25E/26E, resulting in a revised target price of Rs 7,875. They maintain a 'Hold' recommendation.

Meanwhile, ICICI Securities also recommended ‘Add’ for a target price of Rs 8,600, post Q4 results. Analysts noted that Dixon Tech has been prudent in identifying changes in demand conditions for its operating businesses and has aptly moulded its business mix accordingly. 

“While growth rates in Consumer Electronics and Lighting have slowed down for Dixon, the company has swiftly increased its presence in the mobile segment. It now caters to all the major brands in India such as Nokia, Samsung, Xiaomi, Motorola, Itel and Oppo. It has also created a strong position for itself in IT hardware with PLI benefits and has secured clients like Acer and one more global customer. There is also an increase in orders from existing customers such as Motorola and Samsung. We believe there will be cyclical recovery in Consumer Electronics, Lighting and Home Appliances in FY26. Dixon is also investing in multiple backward-integrated initiatives, which will help strengthen its margins and relationships with the customers,” ICICI Securities said in a note.

Constrastingly, those at Kotak Institutional Equities have adopted a cautious stance, recommending a 'Sell' with a target price of Rs 6,000. This recommendation, analysts said, follows a modest performance by Dixon in Q4, with results falling 18 per cent below their expectations. Despite potential new mobile client signings and backward integration initiatives, analysts have lowered their estimates for FY2025/26E due to weak quarterly execution.