Dixon Technologies (India) Ltd. share price target

Dixon had earlier guided for FY23E revenues of Rs170bn and has now cut the guidance to ~Rs125bn. We note some of the issues such as reduction in prices of open cells for TV are likely to hurt in coming quarters too. Also slowdown in white goods and durables due to steep inflationary pressures is also likely to impact the production in near term.

Strong Q2 beat with topline up 38% YoY to Rs 39bn and PAT 15% ahead of our estimates at Rs 777mn

Dixon maintained its strong revenue growth trajectory in 2QFY23, led by healthy growth in home appliances (62% YoY) and mobile & EMS (166.4% YoY) segment.

Key initiatives taken in FY22 to bolster business in electronic manufacturing services (EMS), including PLI initiatives

Mobiles segment drove Q1 topline growth; calibrated pricing action and cost-saving initiatives helped improve margins sequentially

We remain positive over the long term. We value Dixon at 50x FY24 E EPS of Rs 89/ share arriving at the target price of Rs 4,450