Dixon Technologies Gets 'Buy' Rating As B&K Securities Initiates Coverage

Dixon Technologies Ltd., has received a 'buy' rating from B&K Securities as the brokerage initiated coverage on the stock, with a target price of Rs 18,946. The target implies a price-to-earnings ratio of approximately 62 times on FY27E earnings.

"We believe high growth, larger TAM, favourable policy support and high return ratio will help sustain valuation for the stock," the brokerage said.

The target price is based on a DCF valuation, assuming a weighted average cost of capital (WACC) of approximately 13% and a terminal growth rate of 5.5%.

The company is uniquely positioned to benefit from the accelerating shift toward domestic and global electronics outsourcing, it further added.

B&K Securities believes continued scale-up of mobile and IT hardware segments, entering new segment-industrial EMs/EV, increase in wallet share from customers, execution of backward integration or component strategy, scale-up of exports and increasing share of ODM should help Dixon Technologies to post revenue and PAT CAGR of 42% and 69%, respectively, over FY25-27E.

"With efficient capital allocation, focus on working capital and high asset turn, Dixon Tech is likely to maintain a healthy RoCE of approximately 30% by FY27E," it added.

The risks of these include low ODM penetration in high-volume segments such as mobile phones, challenges related to talent and organisational complexity as the company scales, and execution risks associated with component integration.

The risk of these includes low ODM penetration in high-volume segments like mobile phones, challenges related to talent and organisational complexity as the company scales, and execution risks in component integration.

Geopolitical risks around export markets and diversification of supply chain by major clients to avoid over-dependency are other challenges.