Dixon Technologies (India) Ltd. share price target

We maintain BUY and value Dixon at 45x FY23E EPS of Rs 347 arriving at target price of Rs 15,636 a premium to consensus PE of 37x FY23E EPS.

We have introduced FY23 estimates and roll forward our valuation at 36X FY23E EPSof Rs 312 arriving at target price of Rs 11,214. We have changed the stance to BUY vs. Hold earlier.

Strong beat on operational performance as OPM rise on a y-o-y basis for almost all verticals. Overall, average capacity utilisation at 75%-80% for Q2. Gearing up on scaling mobile vertical with approval of PLI scheme. Talks at final stages with three large customers in addition to the current anchor brand. Capacity expansion in LED TVs, batons, down lighters, and washing machines on track. Upbeat on increasing overall ODM share as the mobile vertical achieves scale. Dixon Technologies (Dixon) reported strong beat on Q2FY2021 results. Consolidated revenue for Q2 grew by 16.9% y-o-y to Rs. 1,639 crore, led by 29.6% y-o-y rise in consumer electronics...

DIXON Technologies (DIXON), India's largest EMS player is currently in a sweet spot given a confluence of rising demand,importsubstitution andfavorableregulatorysupportatthesame time.Thecompanyispreparingforaggressivescaleupacrossproductsegmentsbyinvestingin increasing management bandwidth, adding export markets as a key growth engine and continuouslyincreasingthevalue additioninproductslikelighting,washingmachinesandnow televisions. Fungible capacities, backward integration, focus on ODM solutions vs OEM and continuedadditionofMNCclientshavebeenkeygrowthenablersbehinddrivinga30%revenue and 56% PAT growth over FY1520. Further, an assetlight balance sheet, low WC cycle,...

The domestic manufacturing story is leading the path for Dixon and it sits comfortably with a diversified product mix, client mix and fungible manufacturing facilities which can be adjusted to make use of any unutilized capacity. It has been successful in backward integration, improving operational efficiencies and design capabilities to continue on its growth trajectory. It continues to transition from the OEM model to ODM model of doing business, which should improve its margins going forward. The PLI scheme is another opportunity for Dixon, which can...

We recommend a BUY on Dixon Technologies with a Target Price of Rs 6172, an upside of ~5% from CMP of Rs. 5878 and Stop Loss Rs 5,584.

On the back of COVID impact, Revenue remained flat YoY at INR 8,574mn. But for COVID impact, revenue would have grown 19%. During Q1FY21, Dixon got approved by ICMR for manufacturing testing devices for 27 diseases including COVID & TB marking its entry into medical electronics segment. However, EBITDA jumped 50% to INR 561mn despite absorbing INR 100mn impact of COVID as well as INR 45mn impact of Forex loss. Gross margins rose by an impressive 340bps to 15.8%. PAT registered a steep increase of 68% to INR 275mn despite COVID impact of INR 70mn during the quarter....