Dixon Technologies India Ltd.'s diversification and expansion into non-mobile manufacturing segments have inspired confidence on the Street for future growth levers. The second-quarter results have also met expectations.
The company's initiatives to diversify its customer base and target new avenues maintain high visibility of growth, analysts at Nomura said in a note.
Dixon has applied for the government's Electronics Components Manufacturing Scheme for display modules, camera modules, optical transceivers, mechanical enclosures, and lithium-ion batteries with an investment commitment of Rs 3,000 crore over the next three years. The management considers this as the next driver of growth that will also lead to margin expansion.
Macquarie sees a "multitude of growth drivers" with the company now entering into the high-margin enterprise EMS business.
In contrast, analysts at Goldman Sachs said the mobile segment growth is peaking and forecast limited avenues for the company to surprise. "The earnings upgrade cycle has ended with growth moderation driven by a high base... We expect the stock to underperform," a note said.
Dixon Tech Q2 Highlights (Consolidated, YoY)
Net Profit up 72% at Rs 670 crore versus Rs 390 crore
Revenue up 29% at Rs 14,855 crore versus Rs 11,534 crore.
EBITDA up 32% at Rs 561 crore versus Rs 426 crore.
Margin at 3.8% versus 3.7%
Dixon Tech Price Target
JPMorgan: Remain 'Overweight' with price target hiked to Rs 19,600 from Rs 19,500.
Macquarie: Remain 'Outperform' with price target of Rs 20,000.
Goldman Sachs: Maintain 'Sell' but hiked price target to Rs 11,420 from Rs 11,260.
Nomura: Maintain 'Buy' but price target reduced to Rs 21,152 from Rs 21,154.
UBS: Maintain 'Buy' with price target of Rs 23,000.
CLSA: Cut rating from 'High Conviction Outperform' to 'Outperform' with a reduced price target to Rs 18,800 from Rs 19,365.
Shares of Dixon Tech settled 0.8% lower at Rs 16,686.25 on the BSE on Friday, ahead of the results, compared to a 0.6% advance in the benchmark Sensex. The stock has fallen over 7% so far this year.
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