Dixon Technologies Shares Decline As Motorola Diversifies Manufacturing Base

Shares of Dixon Technologies Ltd. fell over 2% on Wednesday as Motorola diversifies manufacturing base. Additionally, PhillipCapital lowered its target price to Rs 9,085 from Rs 11,077, citing rising competitive pressures and a shifting client dynamic. The revised target implies a 37% downside.

However, the brokerage has maintained its 'sell' rating.

Motorola, Dixon’s largest client, has started outsourcing domestic production to Karbonn, ending its exclusive partnership with Dixon from calendar year 2024. While negligible in February–March of calendar year 2025, Karbonn accounted for 25% of Motorola’s domestic volumes in April–May, with estimates suggesting a rise to 35% in June. The move is part of Motorola’s strategy to diversify its supply chain, aided by Karbonn’s eligibility under India’s PLI scheme, which enhances its cost competitiveness.

Although Dixon continues to manufacture for Motorola across domestic and export markets, the value contribution from domestic production is far greater (93% in fiscal 2025). This shift in volumes poses a significant risk to Dixon’s earnings, particularly as Motorola contributed over 70% of its mobile phone revenues.

Further concerns stem from Motorola’s Chinese roots, as its parent company Lenovo has a 10% stake held by the Chinese Communist Party. This introduces uncertainty around long-term outsourcing strategies, especially for exports.

Dixon’s second-largest client, Longcheer, has also begun outsourcing a small portion of its volumes to Karbonn (2% in May 2025), raising concerns of a similar trend unfolding.

While Dixon’s upcoming joint venture with Vivo could add Rs 8,000 crore to topline by fiscal 2027, this potential positive is offset by rising competition. The brokerage has cut Dixon’s fiscal 2027 revenue, Ebitda and profit estimates by 4%, 6% and 9%, respectively. It also lowered the valuation multiple from 50 times to 45 times FY27 EPS of Rs 202.

Dixon does maintain a diversified client base — manufacturing for all major smartphone brands in India, except Apple and Vivo. However, its reliance on Motorola for revenue means the shift in domestic volumes to Karbonn will cap growth at 15% year-in-year in this financial year.

Shares of Dixon Technologies fell as much as 2.10% to Rs 14,201 apiece, the lowest level since June 24. It pared losses to trade 1.94% lower at Rs 14,225 apiece, as of 10:14 a.m. This compares to a 0.54% advance in the NSE Nifty 50.

The stock has risen 21.71% in the last 12 months and fallen 20.70% year-to-date. Total traded volume so far in the day stood at 1.2 times its 30-day average. The relative strength index was at 40.67.

Out of 33 analysts tracking the company, 19 maintain a 'buy' rating, five recommend a 'hold' and nine suggest 'sell', according to Bloomberg data. The average 12-month consensus price target implies an upside of 16.4%.