Dixon Technologies Q3 Results: Profit More Than Doubles, Beats Estimates

Dixon Technologies (India) Ltd.'s consolidated net profit more than doubled in the third quarter of the current financial year, beating analysts' estimates.

The profit of the EMS company, which gets majority of its revenue from manufacturing mobile phones, increased to Rs 217 crore in the quarter ended December, according to an exchange filing on Monday. Analysts tracked by Bloomberg had pegged the profit at Rs 199 crore.

• Revenue up 117% to Rs 10,461 crore versus Rs 4,818 crore (Estimate: Rs. 9,968 crore).

• Ebitda up 116% at Rs 398 crore versus Rs 184 crore (Estimate: Rs. 364 crore).

• Margin at 3.8% versus 3.8% (Estimate: 3.7%).

• Net profit up 126% at Rs 217 crore versus Rs 96 crore (Estimate: Rs. 199 crore)

The mobile business has continued its growth momentum, showing a strong 190% growth in terms of revenues, led by catering to top eight android brands. Recently, Dixon and Vivo India entered into a binding term sheet for a proposed joint venture and will undertake business of manufacturing electronic devices, including smartphones.

The consumer electronics and appliances business has been a laggard. This segment includes LED televisions and refrigerators among other key products. While the refrigerator business has been doing well, clocking Rs 166 crore in this quarter, the majority of the business is led by LED TVs, which has seen a decline in growth this quarter.

Home appliances and lighting business forms smaller share of overall revenue.

With mobile business forming 89% of the total revenue, the overall margins of the company are dependent on this segment. Currently, mobile business formed 80% of the total margins in quarter three.

Margins for mobile business have grown compared to last year. This has helped margins remain steady versus a slight fall in the previous quarter. In their conference call, the company highlighted they have added Noida facility for mobile manufacturing and increasing our phone capacity to 6 crore. The management expects to export 6 lakh smartphones in FY25. Dixon is also looking to enter precision components, camera modules for mobiles soon and this will help margins positively.

The company, in its three-quarter earnings conference call, indicated plans to enter the display fabrication segment, reversing its earlier foray of only non-semiconductor components focus. The company is evaluating this opportunity.

Dixon's management highlighted that this opportunity would require roughly $3 billion in capex or Rs 25,000 crore. Currently, with all central and state schemes, about 70–75% of this capex will get subsidised.

This reverses the company's earlier strategy to stick to non-semiconductor components for electronics.