'Buy' Dixon Technologies, Says UBS After Stock Upgrade — Check Price Target, Key Stock Drivers And More
The note forecasts Dixon Tech's revenue to reach $11 billion by FY28, compared to $2.5 billion in FY25. The growth will be supported by new verticals, exports and partnerships with new brands.
UBS has upgraded Dixon Technologies Ltd. from 'neutral' to 'buy', citing margin accretive growth and economic levers that stretch beyond fiscal year 2028.
The brokerage firm has also hiked the target price of Dixon from Rs 13,000 to Rs. 23,000. The stock closed Wednesday's session at Rs 18,161.
In its latest note, UBS has said Dixon Tech is set to benefit from backward integration into non-semiconductor smartphone components. These products typically include displays, camera modules, enclosures and batteries, among other things.
As per UBS, these products may deliver a 110-basis-point Ebitda margin improvement by FY28. This comes despite the fact that the mobile Production-Linked-Incentive (PLI) scheme will be phased out by FY26.
Dixon Tech is one of India's largest Electronic Manufacturing Services (EMS) provider, which makes mobile phones, LED TVs, along with home appliances such as washing machines and lighting solutions.
The note forecasts Dixon Tech's revenue to reach $11 billion by FY28, compared to $2.5 billion in FY25. The growth will be supported by new verticals, exports and partnerships with new brands.
“Based on margin improvement, we expect scaling up won’t dilute returns as margin gains should offset lower asset turnover,” the note said.
In the recent past, Dixon has entered into joint ventures with companies such as Inventec and Longcheer. The company also has ties with Samsung, Vivo and Xiaomi. UBS believes these partnerships could accelerate through cost efficiency and expansion into high-value products.
Between FY25 and FY28, UBS projects compound annual growth rates (CAGRs) of 36% in revenue, 48% in EBITDA and 46% in profit after tax for Dixon Tech. Amid concerns over high valuations, the firm values Dixon at 68 times FY26 earnings. The stock currently trades at a price-to-earnings multiple of over 100.
“India’s electronic manufacturing is progressing well with government policy and rising global outsourcing demand. Dixon is uniquely placed to capture this trend,” UBS concludes.
