Dixon Technologies' growth story extends well beyond its recently approved Vivo joint venture, with multiple new business opportunities likely to fuel earnings over the next few years, according to Macquarie. The brokerage has reiterated its 'Outperform' rating on the electronics manufacturing services (EMS) company and raised its target price to Rs 16,000 from Rs 15,000, saying Dixon is entering a phase of stronger growth visibility.
While the Vivo partnership remains the biggest near-term catalyst, Macquarie believes several additional growth drivers — including PLI 2.0, industrial EMS, automotive electronics, IT hardware manufacturing and import duty changes — could further strengthen the company's earnings trajectory.
The brokerage now expects Dixon to deliver a 28% revenue CAGR and a 43% earnings-per-share CAGR between FY26 and FY29.
Vivo JV Remains The Biggest Growth Engine
Macquarie said the recently approved Vivo joint venture significantly improves revenue visibility and could be transformational for Dixon's smartphone business.
The brokerage expects Dixon to manufacture an additional 20 million Vivo smartphones in FY27, followed by another 20 million units each in FY28 and FY29. Higher production volumes, coupled with richer smartphone product mixes, prompted Macquarie to raise its revenue estimates for FY27, FY28 and FY29 by 14%, 25% and 21%, respectively.
As a result, EBITDA estimates have also been increased by 26%, 20% and 27% over the three-year period.
Beyond Smartphones
- The brokerage expects the government to announce PLI 2.0 for electronics manufacturing, which could provide fresh incentives for localisation and exports.
- Dixon is also preparing to enter the automotive electronics segment by adapting its camera manufacturing capabilities for vehicle applications, with production expected to begin in FY28.
- Another opportunity lies in industrial EMS, where management is evaluating acquisitions to expand into higher-margin industrial electronics manufacturing.
- Meanwhile, the company plans to deepen its partnership with Inventec to manufacture hardware for data centres, strengthening its presence in India's expanding IT hardware ecosystem.
- Recent customs duty reductions on electronic components used in smartphones and display assemblies could also support profitability across Dixon's manufacturing operations.
Macquarie expects Dixon's margins to improve gradually as scale increases and newer businesses contribute more meaningfully to earnings.
The brokerage forecasts EBITDA margins of around 4% by FY29, compared with about 3.5% currently, while noting that nearly 90% of Dixon's revenue already operates at EBITDA margins of roughly 3%, demonstrating resilience even without additional government incentives.
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