Will Dixon Technologies share price cross ₹18,000 despite growth worries and Vivo JV concerns?

Synopsis: Dixon Technologies (India) Ltd saw its shares rise up to 3% after CLSA initiated a Buy rating with a target of ₹ 18,800, implying a 45% upside despite growth concerns and uncertainties.

The Shares of the Mid-cap Electronics Manufacturing Services (EMS) company, which provides end-to-end design and manufacturing for global consumer durables brands, are in focus after CLSA initiated a Buy rating with upside potential, and investors are now concerned that the stock can cross Rs. 18,000 despite growth concerns and uncertainties around its Vivo JV.

With a market capitalization of Rs. 81,149.85 Crores, the shares of Dixon Technologies (India) Ltd jumped upto 3.2 percent, reaching a high of Rs. 13419.45 compared to its previous closing price of Rs. 12995.00.

What Happened

Dixon Technologies (India) Ltd, a company engaged in providing end-to-end design and manufacturing solutions for global consumer durables brands, is in focus as the leading global brokerage firm CLSA has initiated a Buy rating on the stock with a target of Rs. 18,800, despite certain concerns surrounding the company which implies an upside potential of up to 45% from the previous day’s closing price.

Key Challenges faced by the company

Pending Approval for JV with Vivo: Approval for Press Note 3 is still pending, which could delay contributions of up to 20 million smartphones. This joint venture is expected to add around 20 million units to the projected smartphone production of 58–64 million units in FY27 and FY28. 

Given the 51:49 JV structure, CLSA notes that even if only a fraction of this volume is realized in FY28, the company’s EPS could be affected by approximately 13% in FY27 and 7% in FY28.

Regulatory Approvals for Component Facilities: The company has not yet obtained the necessary approvals to establish its component facilities under the Electronic Components Manufacturing Scheme. Another concern is the limited visibility of medium-term growth, particularly as the smartphone market approaches saturation and achieving incremental gains becomes increasingly challenging.

Despite these challenges, CLSA’s scenario analysis indicates that even if Vivo’s operations face significant delays, the stock is still trading at 44 times its projected earnings for September 2027, a valuation the brokerage considers reasonable.

At the same time, the Serious Fraud Investigation Office (SFIO) under the Ministry of Corporate Affairs is reportedly preparing to file a chargesheet against Chinese smartphone maker Vivo in December. This has added uncertainty to the outlook for the Dixon Technologies–Vivo joint venture, which is awaiting approval under Press Note 3.

CLSA noted that it does not take a position on the outcome of the SFIO investigation or the Press Note 3 approval process. However, the brokerage believes that in a worst-case scenario where the joint venture is not approved, Vivo could lose market share to other smartphone brands. This shift could, in turn, create an opportunity for Dixon Technologies to capture a portion of the displaced production volumes.

Financials & Others

The company’s revenue rose by 28.79 percent from Rs. 11,534 crores to Rs. 14,855 crores in Q2FY25-26. Meanwhile, Net profit rose from Rs. 412 crores to Rs. 746 crores in the same period.

The company demonstrates strong financial health, with a ROCE of 40% and ROE of 32.8%. It maintains a low debt-to-equity ratio of 0.34, reflecting prudent leverage. Overall, this indicates efficient capital use and solid financial management.

Along with it, the company has shown strong performance with 45% profit CAGR over 5 years, a solid 3-year ROE of 28.1%, and a 10-year median sales growth of 45.1%, reflecting consistent growth and efficient capital use.

Dixon Technologies (India) Ltd is India’s largest Electronic Manufacturing Services (EMS) provider, offering end-to-end design and manufacturing for global and domestic brands in consumer electronics (LED TVs, appliances), lighting, mobile phones, security devices, and IT hardware, focusing on “Make in India,” with extensive facilities, a strong client base (Xiaomi, Samsung, Motorola), and backward integration into components like displays for margin growth. 

As of Q2 FY26, the Mobile & Other EMS Division dominated with a 90% share, with revenue rising from Rs. 11,663 cr in Q1 to Rs. 13,361 cr in Q2. Consumer Electronics & Appliances (LED TVs & Refrigerators) contributed 6%, growing from Rs. 672 cr to Rs. 956 cr, while Home Appliances accounted for 3%, increasing from Rs. 313 cr to Rs. 429 cr.

Written by Sridhar J

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