Dixon Technologies (India) Ltd. share price target

While the company has taken the right steps to improve share of ODM, initiated cost saving measures, we believe weaker demand for white goods and durables is likely to impact revenue growth in near term.

Q4 topline of Rs 30.7bn in line with our estimate while improved ODM contribution aided a margin beat

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

Dixon is a leading player in the Indian electronics manufacturing services industry.

Given encouraging long-term potential but limited upside potential from CMP, we recommend a HOLD on the stock.

Dixon operates in both original equipment manufacturing (OEM) and original design manufacturing (ODM) Strong RoE, RoCE at ~20%, ~24%, respectively (three year's average)...

We have rolled forward our estimates to FY24 valuing Dixon at 50x FY24 E EPS of Rs 90 arriving at a target price of Rs 4,500 which gives an upside of 10% from CMP. Maintain BUY.

We tweak our revenue, PAT estimate downward by 6%, ~13%, respectively, for FY22E considering the impact of lockdown in Q1FY22. However, a strong balance sheet, increased backward integration and increasing share of Dixon in domestic electronic manufacturing are expected to result in strong PAT CAGR of 87% in FY21-23E. We reiterate our BUY recommendation on...