Sharekhan has given Buy recommendation for Dixon Technologies with a target price of Rs. 4960 in its research report issued on Oct 25, 2022
Sharekhan’s research report on Dixon Technologies
Consolidated Q2FY23 performance was better than estimates with a slight miss on OPM. Sales growth was led by the mobile and home appliances segments. OPM was restricted to 3.8% due to margin drop in mobile segment. Management expects ~40% y-o-y growth in revenues and OPM to be @ 3.8-4% in FY23. Long-term margin expansion would be led by backward integration and increasing share of ODM revenues. Healthy balance sheet, low working capital and strong revenue/PAT CAGR of ~31%/~47% over FY22-25E justify its rich valuation.
We retain a Buy on Dixon Technologies (Dixon) with an unchanged PT of Rs. 4,960 given its leadership in outsourcing consumer electronics/EMS industry, approvals under PLI schemes, a diversified product mix, and robust long-term growth outlook.