Dixon Tech Share Price Drops After Q3 Earnings; Here's What Analysts Say

Shares of Dixon Technologies India Ltd. fell more than 9% on Tuesday, despite the company posting a robust third-quarter update for fiscal year 2025. The electronic manufacturing services company reported a 117% year-on-year growth in revenue and a 116% increase in Ebitda, driven by strong performance in its mobile and EMS segments.

However, Dixon Technologies is facing several headwinds that are dragging down its performance. Brokerages have lowered their FY25 estimates, with Motilal Oswal and Nuvama both trimming their forecasts by 8%.

One of the key challenges is weakness in the consumer electronics division, which has seen a significant dip in demand due to seasonality. This has resulted in the division’s contribution to both revenue and operating profit dropping to around 6%, from 17-19% year-on-year. The second-highest contributor to revenues has also experienced a sharp decline of 32% YoY.

Additionally, brokerages remain cautious on Dixon's valuations, given that the stock has surged 2.7 times over the past year. Its current P/E ratio stands at 262 times, which is significantly higher than its 5-year average of 97 times. The company's debt levels have also been rising, with total debt increasing to Rs 361 crore in Q3 FY25, up from Rs 155 crore in FY24. This has led to a rise in the debt-to-equity ratio, now at 0.15 times compared to 0.09 times in March 2024.

Still, Motilal Oswal and Emkay Global have reiterated their 'buy' ratings on the stock. Motilal Oswal raised its target price to Rs 20,500 from an earlier estimate. Emkay Global too increased its target price to Rs 21,100, emphasising Dixon's acceleration in growth driven by its mobile and telecom segments.

Meanwhile, Goldman Sachs maintained a 'Sell' rating on Dixon Technologies and revised its target price to Rs 10,240 from Rs 10,290. The brokerage noted that the company's Q3 performance was below expectations, as PAT growth lagged behind revenue growth, despite positive margin support from favorable foreign exchange movements.

The scrip fell as much as 9.04% to Rs 15,972 apiece. It pared losses to trade 8.71% lower at Rs 16,0300.40 apiece, as of 09:35 a.m. This compares to a flat NSE Nifty 50 Index.

It has risen 173.49% in the last 12 months. Total traded volume so far in the day stood at 4.8 times its 30-day average. The relative strength index was at 39.

Out of 31 analysts tracking the company, 16 maintain a 'buy' rating, six recommend a 'hold,' and nine suggest 'sell,' according to Bloomberg data. The average 12-month consensus price target implies an upside of 3.7%