The Electronics Manufacturing Space is going through a difficult period, with Dixon Technologies Ltd. being an ideal case in point. The stock has fallen more than 40% in the last six months, amid sectoral tailwinds and broad-based selling in the market, in the wake of global turmoil.
Even in the wake of recent drawdowns, however, Jefferies has maintained its cautious tone on Dixon Tech, citing the company's elevated valuation and an estimated fall in volumes, especially when it comes to global smartphone shipments.
This comes on the back of Dixon Tech recently receiving the approval from the ministry to form a joint venture with HKC Overseas Ltd.
In its latest note on Dixon Tech, the global brokerage firm has maintained a 'hold' rating on the counter, with an unchanged target price of Rs 11,350. Although this still implies a 15% target price from Monday's closing price of Rs 9,810, Jefferies has highlighted certain tailwinds that have compelled the firm to maintain a hold rating.
For one, Dixon Tech currently trades at a 47 times price to earnings, despite the stock seeing a 40% fall in the last six months. This is above most peers in the EMS space.
Moreover, Jefferies estimates that Dixon Tech's global smartphone shipment volumes could fall 31% in calendar year 2026, due to a multitude of factors.
One of them is the rapid surge in DRAM prices as AI-led demand has crippled global supply changes and are already leading to a surge in smartphone prices, with Samsung recently increasing its base model price for the S26 series.
Jefferies notes that DRAM prices sequentially rose 70% in the first quarter of CY26 and could rise as much as 50% in the second quarter. This doesn't bode well for Dixon Tech as DRAM constitute 15% of the company's raw material cost.
In addition to the DRAM issue, Dixon Tech has several other tailwinds, including the expiry of Mobile PLI and uncertainty on whether or not it will be reintroduced. Vivo approval are also pending, thus adding to uncertainty over Dixon Tech heading into the second quarter of this year.
ALSO READ: Tough Times Ahead For Dixon Tech After Budget 2026? Brokerages Say Yes; Pick Other EMS Stocks
Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.
