Dixon rallies 6% as unit signs MOU with Asus for manufacturing notebooks

In the past one year, Dixon Tech has zoomed 182 per cent, compared to the nearly 23 per cent surge in the BSE Sensex during the same period.

Shares of Dixon Technologies (India) surged 6 per cent on the BSE in Monday’s intra-day trade to hit a new high of Rs 13,848.10, after Padget Electronics (Padget) signed a memorandum of understanding with Asus India (Asus) to manufacture information technology products such as notebooks, for the company.

Padget is a wholly owned subsidiary of Dixon Technologies.

Asus is a multinational company known for some of the best motherboards and high-quality personal computers, monitors, graphics cards, servers, routers, smartphones, optical storage, multimedia products, peripherals, wearables and other technology solutions.

The company also claims to have the best motherboard and gaming laptop, as well as being one among the top-three consumer notebook vendors.

 

Meanwhile, Dixon Technologies is a home grown design-focused tech solutions company engaged in manufacturing products in the consumer durables, lighting and mobile phones markets in India.

Its diversified product portfolio includes consumer electronics like LED TVs, home appliances like washing machines, lighting products like LED bulbs and tubelights, downlighters, mobile phones, and CCTVs and DVRs, wearables, and refrigerators, among other appliances.

Dixon also provides solutions in reverse logistics, that is, repair and refurbishment services of LED TV panels.

At 12:33 PM, Dixon Tech was trading 5.7 per cent higher at Rs 13,764, as compared to the BSE Sensex that was trading flat at 82,894.

The company's stock is quoting higher for the sixth straight trading day, having rallied 15 per cent during the period. In the past one year, it has zoomed 182 per cent, compared to the nearly 23 per cent surge in the benchmark index. 

Dixon Technologies, having made its stock market debut on September 18, 2017, has seen its market value skyrocket 3,821 per cent, or 39 times, from its issue price of Rs 353.20 (adjusted to stock split from Rs 10 to Rs 2).

The electronics industry in India is now positioned at an inflexion point, with the country planning a Rs 44,000-crore boost to becoming an electronics powerhouse.

"With India gradually strengthening its value proposition as an alternate manufacturing hub on the global stage, while gradually reducing its electronics imports and scaling up domestic manufacturing, a paradigm shift in the growth of indigenous EMS players like us is anticipated," Dixon had said in its annual report for FY24.

Enhanced government impetus for ‘Make in India’ products and recent policy boosters for electronics and component manufacturing in India to support assembly, also augurs well for the company’s growth.

Last month, rating agency ICRA had upgraded Dixon’s long-term rating of instrument and revised its outlook to stable from positive.

ICRA expects the company to sustain  the  strong  revenue  growth  momentum  over  the  medium-term , driven  by  a scale-up  in  new  business  segments  and products (IT hardware, telecom and networking products, wearables, refrigerators, etc.), coupled with a healthy and consistent order inflows, and customer  diversification.

The ratings agency continues to derive comfort from Dixon Group’s (comprising Dixon along with its subsidiaries and joint ventures) strong operating  profile,  characterised  by  an  established  track  record  as  an  electronic  manufacturing  services  (EMS)  player, with its presence in diversified product segments, a leading position in its key product segments (like LED television, lighting, mobiles, washing  machines,  etc.)  and  established  relationships  with  a  reputed  clientele. 

In  the  past  two to three  years,  the  group  has strengthened its relations with existing clients and onboarded several new ones across segments, such as Xiaomi (mobiles), Realme, Compal, Voltas and Bosch (home appliances), Airtel and Jio (telecom and networking products), Acer and Lenovo (IT hardware), among others.  

The  group  is  a  beneficiary  under  the  production-linked  incentive  (PLI)  scheme  for  five  segments, including mobile phones, lightning, telecom and networking products, inverter controller boards for air conditioners and IT hardware, and has achieved the incremental investment and revenue thresholds for FY24 for four PLIs barring IT hardware, for which FY25 is the  first  eligible  year.  

A  part  of  the  incentives  realised  so  far  has  also  been  shared  with  the  clients.  A  conducive  policy environment (thrust on Make in India initiative), healthy domestic demand (led by low penetration levels) and China+1 strategy of global manufacturers, are expected to support a faster ramp-up of Dixon’s scale of operations over the medium term, ICRA stated.