Dixon Technologies has reported remarkable financial results for the second quarter of fiscal year 2025, with a staggering 133% year-on-year (YoY) increase in revenue, reaching Rs 11,534 crore. This performance has been significantly bolstered by an impressive 235% YoY growth in the mobile segment. The company’s net profit surged 265% during this quarter, amounting to Rs 412 crore, fueled by substantial investment gains and robust production in mobile phones.
Despite the remarkable earnings announcement, Dixon’s stock experienced a notable decline after a brief spike. Following the release of its Q2 results, the shares soared to an all-time high of Rs 15,999.95, reflecting a 6.21% increase. However, this was followed by profit booking, causing the stock to plummet by 13.33%, settling at Rs 13,055.30—an 18.40% drop from its record high. The trading session was marked by significant activity, with a turnover of Rs 176.33 crore, and the company’s current market capitalization stands at Rs 84,653 crore.
Brokerage firm Nuvama responded to Dixon's strong performance by adjusting its earnings per share (EPS) forecasts for FY25 to FY27 upward by up to 23%, citing the company's robust outlook. However, they have maintained a 'HOLD' recommendation for the stock, indicating limited potential for further gains despite the strong results. They value Dixon at 65 times its projected December 2026 EPS, setting a target price of Rs 16,100.
In contrast, Motilal Oswal has adopted a more bullish stance, reaffirming a 'Buy' recommendation and increasing their target price to Rs 17,500. They highlighted that Dixon’s results surpassed expectations, particularly in the mobile and electronics manufacturing services (EMS) sectors, and noted the positive impact of the integration of Ismartu, which occurred in mid-August. The firm forecasts a compound annual growth rate (CAGR) of 48% in revenue, 49% in EBITDA, and 56% in PAT from FY24 to FY27, attributing this growth to the expansion of EMS, consumer electronics, and new segments such as refrigerators and wearables. They also expect an increase in EBITDA margin from 3.9% to 4.1% during this period, driven by enhanced backward integration and a growing share of higher-margin products.
Despite the optimistic outlook, Motilal Oswal has also recognized several risks that could impact Dixon’s growth trajectory. These include the potential for slower market growth, loss of key clients, increased competition, and diminished bargaining power in the industry.
Overall, Dixon Technologies continues to establish itself as a significant player in India’s consumer electronics and contract manufacturing sectors, producing a diverse range of products from consumer durables to mobile phones. The substantial increase in revenue and profit underscores the company's strong market position and growth potential, even as market fluctuations present challenges for its stock performance.
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