Shares of Dixon Technologies (India) Ltd. fell as much as 2.5%, or Rs 366, to Rs 14,484 on Monday after brokerages assessed the potential impact of the government's Rs 62,500 crore Mobile Phone Manufacturing Scheme.
CLSA said Dixon could face challenges in qualifying for incentives under the new programme unless its export volumes increase, while Kotak Institutional Equities said the scheme could support contract manufacturers through higher production volumes, better capacity utilisation and increased domestic sourcing.
The contrasting brokerage assessments came after the government notified the five-year scheme, which offers incentives to mobile phone manufacturers and Indian-owned brands while linking benefits to sales growth and domestic sourcing.
Brokerage View
CLSA maintained its Underperform rating on Dixon and said a significant portion of the company's sales could find it difficult to meet the scheme's eligibility requirements without higher exports.
The brokerage said exports would be important for manufacturers seeking to meet the growth thresholds under the scheme.
Kotak, however, said the policy could support electronics manufacturing services companies by encouraging scale and localisation. The brokerage estimated that the scheme could add about 14 to 22 basis points to Dixon's EBITDA margin, although it retained its existing estimates and forecasts.
The brokerage said the scheme was unlikely to have a material near-term impact on its financial projections for Dixon.
New Scheme
The government's Mobile Phone Manufacturing Scheme has a budgetary outlay of Rs 62,500 crore and will run from FY 2026-27 to FY 2030-31.
Under the manufacturing segment, eligible companies can receive incentives ranging from 2.25% to 5%. Existing brands must achieve annual sales growth of Rs 5,000 crore above their FY 2025-26 sales, while new brands must first reach annual sales of Rs 10,000 crore before meeting the annual growth requirement.
The scheme also offers an additional incentive of up to 1.5% for domestic sourcing of key components and sub-assemblies.
The government expects the programme to help drive cumulative mobile phone production of about Rs 39 lakh crore and generate around 60,000 direct jobs over its five-year tenure.
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