Dixon Tech Gains Emkay Coverage On Robust Sales, Earnings Forecast; 23% Upside Seen

Dixon Technologies Ltd., an electronics components maker, has received a fresh bullish call from Emkay Global as it sees multiple mid-to-long-term growth drivers for the company that are yet to be factored into the share price price.

Key growth drivers include a rising smartphone assembly opportunity, which is expected to contribute 70-75% of incremental revenue, and expanding prospects in IT hardware. The company's focus on backward integration is likely to drive sharp margin improvements, Emkay said in a note on Wednesday.

Additionally, Dixon Tech's potential role in the Rs 4 lakh crore industrial printed circuit boards or PCBs and auto electronics market by fiscal 2035 is not yet priced in. Emkay forecasts sales and earnings to grow at 20% and 40% on a compounded annual basis, respectively, over the next ten years, with the company's strong fundamentals justifying its premium valuation.

"With management style centered around promoting entrepreneurship and strong execution within the organization, and by closely aligning itself with India's global manufacturing hub ambition in consumer electronics, Dixon has, over time, successfully gained leadership across verticals and continuously expanded into adjacencies," the note said.

With such an outlook, Emkay has placed a 'buy' rating on the stock and a target of Rs 20,000, indicating a 23% upside over the previous close.