Shares of Dixon Technologies Ltd. will be in focus heading into trade on Friday after both Jefferies and Macquarie shared a cautious outlook on the company following the release of its third quarter earnings, where profit jumped 68% year-on-year but operational numbers missed estimates.
In their latest notes, both Macquarie and Jefferies have issued a target price cut on Dixon Tech, citing the Q3 earnings as an operational miss while highlighting delays in the VIVO deal.
Macquarie, for its part, has maintained an 'outperform' rating on Dixon Tech but has cut the target price from Rs 18,000 to Rs 15,000, stating that the result missed as increased memory prices caused lower mobile volumes while the consumer durable segment was weak.
NDTV Profit reported in September that the global AI boom has directly led to an unprecedented surge in RAM and SSD prices across the globe. That has only intensified in the last couple of months.
Dixon Technologies Q3 Results (YoY)
- Profit up 67.8% at Rs 287 crore vs Rs 171 crore
- Revenue up 2.1% at Rs 10,672 crore vs Rs 10,454 crore
- Ebitda up 6.1% at Rs 414 crore vs Rs 391 crore
- Margin at 3.9% Vs 3.7%
Macquarie adds that FY27 will mark the trough for Dixon Tech, with revenue growth and margin expansion expected to come back in FY28. It further added that Dixon Tech's current valuation takes into account the ongoing headwinds.
As for Jefferies, the brokerage firm has maintained a 'hold' call on Dixon Tech while cutting the target price from Rs 13,070 to Rs 11,350. It has labelled Dixon Tech's Q3 earnings as an operational miss, with sales growth deteriorating sharply while PAT was boosted by other income.
Jefferies notes that regulatory approvals for joint ventures with Vivo and HKC are still awaited, while a sharp increase in DRAM prices for smartphones and PCs can impact the order book going forward.
ALSO READ: Dixon Technologies Q3 Results: Profit Up 68%, Revenue Sees Uptick
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