Dixon Tech Eyes 120 Basis Points Margin Expansion In Two Years

Dixon Technologies (India) Ltd. aims to grow its Ebitda margins by at least 120 basis points in the next 24 to 28 months, banking on the backward integration strategy the company has adopted, according to Chief Financial Officer Saurabh Gupta.

The Ebitda margins of Dixon Technologies have remained within the 4% range over the past few quarters. The company logged a margin of 3.8% in the October-December 2024 quarter.

However, Dixon Technologies is now looking at expanding its margins by 120 bps over the next couple of years, Gupta told NDTV Profit.

“Because of the backward integration strategy, we are also looking to expand our margins. So we think that by doing all those backward integration projects, we should be able to expand our margins by at least 100 or 120 bps in the next 24 to 28 months,” he said.

“In two years, it should be 100 to 120 bps. From the next financial year, it should be around 30 to 40 bps of improvement,” the CFO added.

Dixon Technologies has adopted a strategy of doing backward integration in its mobile phone segment.

“Now, all these backward integration projects that we are planning to do in the files will come at double-digit margins for us. So presently, the mobile margins are hovering between 3.3% and 3.5%. So once they start reflecting, then the margin profile will continue to increase,” Gupta said.

Since mobile contributes to a large part of the company’s growth but comes with lower margins, the overall margins are getting dragged down, he explained.

“But things will start to change as we get into backward integration. So you will see margin expansion happening in mobiles, which would have a positive impact on the overall company margins,” the top executive said.

The company also plans to expand its compound annual growth rate by 50% in FY26, on the back of a large order book, Gupta mentioned.

“I think it's the kind of order book that we have in mobiles. From a large base this year, I think we can grow by almost 50% CAGR next financial year,” he said.

“We pretty much will do a volume of almost 30 million smartphones. Last year, we were at 5.5 or 6 million smartphones. In the next two years, we should be doing volumes of 60 to 65 million because we have a large order book from all our customers,” the Dixon Technologies CFO added.

Dixon Technologies shares were trading 1.28% lower at Rs 15.264.95 apiece as of 10:23 a.m., coming off a high of Rs 15,638.30. Meanwhile, the benchmark Nifty 50 was trading 0.34% lower.