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Dixon reported a consolidated revenue of Rs 2,953 Cr in Q4FY22, down 3.9% QoQ but up 40% YoY, led by strong growth in the Mobiles and Home Appliances segment.
Though the Gross margin declined by 96bps QoQ, it witnessed an improvement on a YoY basis. The company's EBITDA margins improved by 65bps to 4% (Vs 3.4% in Q4FY21) due to operating leverage, cost improvements across segments, and price hikes are undertaken to mitigate RM increases.
The PAT stood at Rs 63 Cr against Rs 46 Cr in Q4FY21. Dixon continues to focus on new client acquisition and product addition to aid its topline growth, backward integration, and increasing ODM revenues.
We believe Dixon will continue to benefit from the strong order book and execution capabilities to scale up its operations and enter new product segments while deriving benefits from the PLI schemes in multiple segments.
We expect revenue/PAT to grow at a CAGR of 38%/52% between FY22-24E factoring in profitable growth across segments. We value Dixon at 50x FY24 EPS of Rs 89, arriving at the target price of Rs 4,450. (Vs. Rs 4,500 earlier). Maintain BUY.
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